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Diesels run on oil so you have unburnt oil in the water. you are not going to get any oil out of the exhaust manifold so not from drilling out the bolts. since diesels burn oil, oil past the rings will get burnt and be black, blue smoke will be from exhaust valve stem but very hard to see because of the exhaust mixing with the water cooling down the blue oil vapors. excess oil in the water is most likely from worn injectors or injection pump timing
 
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