Well David, this certainly is proof I read your note waaaay too fast. Thanks for being kind!
Water in the oil, yeah, a little more critical than oil in the water. Rest assured, if you had the oil in the water thing with your boat, it would not go unnoticed because you would be generating an oil film around your boat. Sooner or later this would be noticed.
Water can get in the oil from a head gasket, where the water passage is next to an open pushrod or unpressurized oil drainback passage into the sump. It can also get there from a cracked waterjacket, in which case tbe block is toast. It can get there through a rusted intake manifold, since any dripping of water at all will most likely find it's way back into a drainback into the sump. It is probably not coming from the exhaust manifold, or you would have likely experienced hydrolocking.
First step is to look at plugs, that would give an indication of what the motor is doing as presently assembled. Pull the heads and that intake, look at the gaskets on everything, hopefully you'll find the problem. Look for a rusted intake while you have things apart, not sure just how the small block Ford of this vintage routed water to the thermostat and all, but if that is rusted through, you may be getting a drip from there.
Good luck
Paul