I have water in the oil. I want to use blue devil, sealant. Should I flush the cooling system, running the vehicle with milky oil? or should I change the oil?
Are you trying to squeeze the last few miles out of this car before it dies? If not, you really should fix it properly.
I wouldn’t run an engine with milky oil. That just risks more damage.
Year, make, model, engine? It’s not a GM by any chance? GM vehicles of the late 90s/early 2000s were known for intake gasket leaks. There was a class action suit but it’s too late to put a claim in.
I bought a 2000 Blazer in 2003, a year later the intake gasket started leaking at 44k miles. It was slowly losing coolant (~1 pint/month). At the next oil change the local mechanic saw a few drops of water as the last of the oil drained out. He recommended I have the intake gasket replaced immediately. The reasoning was that any water can displace the oil from the main bearings and trash the engine. The dealer replaced the gasket and split the cost 50/50 as a goodwill gesture. The truck has 120k miles and has had no further leaks.
Regardless of what you do, change the oil. My mechanic of 17 years was concerned about a few drops of water in the oil and it sounds that you have a lot more water in the oil than I do.
If the coolant level is not dropping and you make a lot of short trips, it’s not unusual for condensation to cause a milky goo on the inside of the oil filler cap. I’ve found longer drives to fully warm up the engine and replacing the PCV valve will fix this.