Re: Urgent help needed!!!
Water and oil will separate but sometimes the separation is so slow it won't happen in our lifetimes. One of the reasons the separation is slow might be that there isn't much water present, or it could be other reasons, description as "Why" below.
If you want it to separate so you can gauge the amount of water and oil, you can do one of, or both of, these things;
A) Add a couple of teaspoons of salt, shake the sh## out of it, then let it sit a couple days more. This will make the water droplets heavier and will make the surface of the small droplets less stable so they join together and then drop out more easily.
B) Add an ounce or two of gasoline, shake the sh## out of it, then let it sit a couple days more. This will make the oil droplets lighter and will make the surface of the small droplets less stable so they join together and then drop out more easily.
I'm a chemist by training and these are standard tricks to "break an emulsion", that is force an oil/water mixture to separate faster than it wants to.
I'm afraid I can't comment on how you should proceed with your engine, that's not my area of expertise.
Why?
Some of the things that slow down the separation are; when the droplets are whipped to a very small size, if any surfactant is present (soap, detergent [regular engine oil contains detergent, 2 stroke oil and gear oil don't], even small amounts of weed or algae, and some other things can act as surfactant to stabilize the mixture of oil and water), if the oil got very hot and partly oxidized or burned it will not separate easily. A practical example is shaking vinegar and olive oil to make a dressing, it separates really fast but add a little garlic, spice, or sugar and it remains mixed much longer, though it will still separate.