G2500vh engine problems

Hi Derek.
It is almost impossible for the engine oil to become "milky" under normal circumstances. If you have changed the oil and have used the wrong type, it may become aerated and appear milky. The only other way for water to be added to the sump is through the oil filler. I doubt this is the case as it is a neglect thing and indicates that someone has run the machine without the oil filler caps. Hopefully this is not the case, but as the engine has a low oil level sensor, it might be the reason why it wont start. It's a safety device.
There is no way that the engine oil can be contaminated by water from the pressure pump.
If you mean that the water pump oil is milky, this means that the seals have failed between the pump and the transmission. Difficult to check in a G2500. If this is the case the machine has probably been used beyond the manufacturer's intent and has overheated.