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Re: New engine?
What color is the Sludge?
If it's milky color you've got some water contamination, and it'll cost a little to fix . But still less than a re-build.
If it's just dirty oil then your best bet is do an engine flush, and a oil change. I would consider doing another flush and oil change a week or 2 later, then start using Synthetic oil.
It might take of your rear seal leak as well.
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