I have A 1997 Catera and also have oil mixing with the water, causing a whitish brown sludge in surge tank and coolant system, I removed the oil cooler and the top side where lines connect showed no signs of leakage , however underside of cover showed the whitish brown sludge, not red like someone had mentioned,however I pressure checked the cooler and no leaks were found to the cooler itself(could the seals have failed) if so wouldnt I have seen oil to the top of cooler cover?)after some investigating I found out my son's mom had someone replace the heater bypass and I found they hooked up a vaccumn line that runs drivers side down by trans area to the plheumn ontop the intake, this hose is a vent and the heater bypass vac. line should have gone on this port( could this have caused the problem ?) I also pulled the radiator and pressure checked the trans cooler, thinking trans fluid was mixing with coolant, however no leaks found. I'm going to replace the t-stat. since it's right there, and do a cylinder leak down test(hopeing it's not a head gasket)anyone out there with similar problem and now corrected, please let me know,because I dont have a manual that shows belt timming, this is my only fear of removing the heads for inspection.also the car seem to over heat boiling out of the surge tank could this be the surge tank cap(defective)
the water pump seems to circulate coolant. Thanks again

Unfortunately this engine forum is not visited by Catera owners often. I suggest searching for past oil cooler threads in the "Catera and Cimarron Forum (http://www.cadillacforums.com/forums/cadillac-catera-cimarron-forum/)". You will find answers there, I guarantee. In the meantime my guess is a leaking oil cooler.

Doubtful that the HBV is the problem since it has nothing to do with the engine oil supply. Neither does the transmission cooler. A blown head gasket is rare, contrary to most supposedly knowledgeable technicians' oppinions. They'll replace the gaskets and happily charge you for it but that won't cure the problem.

The L81's oil cooler is a oil/coolant heat exchanger and, I hate to say, the 97-99 versions often leak. The cooler design was changed in 2000 but, though not as often, it can still leak. Live with periodic replacement or convert to a more conventional external oil/air cooler. Both topics have been discussed.

Elvin