Why is there water in my engine oil?
Condensation if you’re lucky. Leaking head gasket if you’re not.
Water vapor is one of the by-products of the combustion process. If your vehicle is driven short distances and never has a chance to warm up fully, water can and will condense in the engine block. Over time enough water may accumulate to show up as a milky substance in the oil.
A leaking head gasket will make itself apparent much more quickly.
How’s the coolant level in the radiator?
The coolant level is good and the vehicle has been driven numerous short distances. How do you determine is the head gasket is leaking?
How about some info on your car (make, model, year, miles, etc. For example, GM cars from the late 90s and early 2000s had a higher than average number of intake manifold gasket leaks. My 2000 Blazer had the gasket start leaking at 44k miles. The coolant leaks into the oil and the oil is displaced from the crankshaft bearings by the coolant. Coolant makes a lousy lubricant. The only sign of the leak was the coolant overflow tank level dropping an inch or so a month. When my mechanic changed the oil, he noticed a small amount of coolant in the oil as it drained. I took it to the dealer and they verified it was an intake manifold gasket. Since the leak was caught early, no engine damage occurred.
On the other hand, I had condensation/milky sludge forming on the oil cap and dipstick of two of my other cars. It was a combination of short trips and a bad PCV valve. A longer drive once a week and replacing the PCV valve on each car fixed the problem. I hope this is your problem.