Bought my 1st real tractor a week or so ago to use on my few acres in Georgia. Old Ferguson TO30 w/z129 engine (similar to the old ford 8n's). Engine oil was pretty dirty - typical old tractor oil. The Trans/Hydraulic fluid was milky from water. Again, typical from a sitting tractor.
Wish I took pics and all, but my hands were so dirty from the oil/diesel/fluids...however, i will explain the basics behind it.
Here's what I did:
Drained engine oil (5-6 quarts) and then drained Trans/Hydraulic fluid. I must warn you, have a large bucket b/c the trans/hydraulic system holds about 5 gallons in my tractor....more if there is water in there
In the engine, I used a mixture of 50/50 engine oil and diesel fuel to "FLUSH" out the sludge and gunk. Run the engine at idle or slightly above idle for 5 minutes...shut down and drain. Change filter and install fresh oil. Now your crankcase should be pretty clean.
In the hydraulic/trans, I used a mixture of 50/50 hydraulic fluid (for tractors) and diesel fuel. Run the engine and operate the lift up and down several times, also run between reverse and fwd gears....about 5 minutes was sufficient. Drain fluid completely and refill w/recommended fluid. Now your system is CLEAN.
This process removed ALL of the water and milky-ness from the hydraulic/trans. Lift operates flawlessly. The engine oil is prefectly clean now...! My experience w/engines is a mix of oil and "diesel fuel" is a cheap way to flush an engine and still provide some protection to the engine. I have also heard good success with "SEAFOAM". In any case, I would not run and engine or hyrdaulics for a long time. 5 minutes of running at a lower rpm is sufficient for cleaning most systems.
Of course, do this at your own risk, there are stories about doing engine flushes and the flushing process loosening old sludge and clogging oil passages and blowing motors. My personal opinion is there were most likely other issues and the engines were already worn out and ready to blow up. Anyhow, I have been doing these type of flushes for over 20 years on various engines from single cylinders, to good old american v8's..... and NEVER had any issues.