Help! Coolant in oil (long), cylinder head gasket replacement

[Brian K]

I'm running out of options here and need some advice from you guys.  Recently turbo'ed my DE.  All was fine, but started having overheating problems.  I don't *think* it overheated severely -- I shut it down before the temp gauge pegged.  I ended up parking it and doing lots of work on it, and now I'm at the end of my rope.  Opinions needed!
Here's what I did after it overheated:
1.  Drained oil (milky), drained coolant, removed manifolds, removed head (all per FSM instructions).  The existing head gasket looked kinda rough.  Replaced water pump.
2.  Took head to a reputable local machine shop, had it cleaned, pressure tested, and machined/checked for warpage.  All ok according to them.
3.  Installed new Fel-Pro head gasket (didn't use any tube sealant -- the head gasket directions said it wasn't necessary b/c the gasket is lined with a bead of sealant that flattens out and seals when the head is torqued down.
4.  Installed head per FSM specs -- used new head bolts (thanks Greg Vogel) and torqued in proper sequence.  For those who haven't done it, the torquing process is pretty involved and also nerve-wracking -- during the final tightening steps I was just sure I was gonna snap off a bolt.
5.  Refilled all fluids and cranked it up.

Now I've got the following problems:
1.  White smoke / water dripping out tailpipe
2.  Engine oil looks like chocolate milk
3.  Loud ticking coming from valvecover (maybe noisy lifter?)

I just did a compression test, and it came out 225-225-235-230.  NOTE:  my compression gauge is probably broken, because it naturally rests at about 30psi as opposed to 0.  I'll pick up a new one today and re-test.  Anyway it seems like the readings are about constant anyway, even if they're all 40psi too high.

Any suggestions at all?  I'm pretty bummed at this point, as you can imagine.

Brian in VA
92 SE-R
List lurker since 99