water leak

I seriously doubt you will smell any exhaust in the cooling unless a head gasket is blown badly LOL ; it would be seriously overheating. So that is a pretty worthless test IMHO. A cooling system pressure check is the way to do that.The specific tests and checks mentioned are for a good reason; other short cuts will not tell you what is going on.

OK, on the milling.

Yes, if the timing cover was cracked or the water pump impeller got a bit loose and shifted back and ground into the cover, then it would leak.

But you need to see if there is real water in the oil first BY DRAINING THE OIL. The water/coolant in the breathers could be that or could be condensation. And the loss of coolant could be due to going into the crankcase OR due it being burned in a cylinder due to a head gasket leak. Again, doing a cooling system pressure is the most likely way to check that.