Sorry for doubting the OP's sincerity. We just see so many "fly by's" who disappear without a conclusion that I wondered.
TXDart has the best idea for the missing oil. If it is a 1962 170 engine (3 core plugs on side of block), the pushrods go thru big cavities in the head, enough to stick your hand down and pull out the lifters. If the OP sees the 7 qt of oil sitting in those cavities, that explains things, and should be easy to clean out the drain holes. As for the milky stuff, that will take more investigation to see if a serious issue with coolant leakage.
