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The gear oil was more like sludge than oil. I don’t think it was ever changed or if it was not often. I do believe it has been resealed at one time as there was very little trace of water in the oil. It was black and not milky at all. I appreciate all of the input. It’s good to have other’s insight as to what might be going on. This is not the first motor I have tore down nor will it be the last I’m sure. I always seek out the obvious first when starting to work on a motor. Compression, spark and fuel. From there as we all know without the 3 working nothing else will either. I would of bought this motor even if I had checked the compression on it first because of it’s appearance. It will end up staying in my personal collection as I will never get out of it in sale for what I have into it.