coolant leaking.....

I read alot of posts regarding this when i did a search. But my buddy has a 96 jetta 5sp, 2.0L.... he keeps losing coolant, and we noticed ALOT of residue ontop the transmission bellhousing. I cannot tell if it is the hose flange on the head or not. I would think that if it was the flange that it would travel along the hose as it leaks. My Suspicions point towards the head gasket. I have yet to do a compression test on that cylnder, but, i just changed his oil for him, and it has an odd color to it. Granted, he had not changed his oil in around 7k miles because he was lazy.... normally really old oil is black, but this oil was brown, for the first half of the drain, then it became really light brown with an almost white tint like it had milk in it. Almost looked like a chocolate fudge milkshake. He does go through coolant pretty quick, and i cant smell anything in the exhaust. The leak appears to be coming from right under the flange on the head. I cleaned the area and told him to drive it for a few days so i can see better maybee. Any suggestions? Impressions? etc?

Drain the oil out and put it in a jar (some of the light brown oil) then let it settle to see if the coolant separates. The flange has an o-ring that could be blown. With a hot engine; Stop the engine then immediately take the oil cap off. Place a piece of cold metal or mirror over the opening and check for condensation.

smartest advice anyone has ever given me on AF!... will try and follow up soon.
Thanks!

Check your hose flange on the block where all your hoses terminate . Mine had a hairline crack underneath and dumped coolant on the Bell housing. I could not see mine leak so it only leaked when it was rnning..

Did a clynder leakage test, bubbles out the side of the seam in the area of the leak when i crank it up to around 250psi. replaced head gasket, now good compression, and no more than 10percent leakage at 200psi (standard is 100) on any cylnder. and the flange was cracked. Go figure.