Tractor left outside for 2-3 yrs?

Good morning,

We have a late 1950's era JD 420 which was my cousins tractor. He left it outside for the last two-three years and for some strange reason the oil and gas caps popped off (how would this happen?) and there is now water in the oil and gas tank.

The tractor ran well when he parked it last. I am installing a new electronic "ignitor" ignition and 40K volt coil, and will change plugs but what do I do about that crankcase?

Simple drain and and change of the water/gas and water/oil and filter, etc.? Or do I need to do more or check something else? I haven't turned it over yet or even put a battery in.

Besides draining and cleaning everything I would take valve cover off and try to roll engine over slowly and see that all valves are free so you don't bend or break something.

in this case atf is your best friend ,..if it were mine I would fill the crankcase overfull with atf to displace the water , DO NOT START THE MOTOR , then drain it out a day later,. put normal new oil in with a qt of atf .and lucas oil stabilizer .. once started ,. easy does it for about 10 hours lite duty ,.. then change oil and filter again ..you mite add a qt of atf to 5 gallon of gas to improve everything and or lucas fuel additive ,.

couple other suggestion also Steve:
You didn't say if you had inspected the gas tank for rust. Make sure when you pull the tank off and drain it, that you inspect for rust in the tank. If the tank started to rust, and you plan to keep and use the tractor you may as well coat the tank with tank sealer while you have it off and dry. Otherwise you'll fight the rust clogging the fuel valve screen, and filters for ever.
Water in crandkcase, I guess while I had the valve cover off as suggested, I would leave drain plug out, cover off, and direct some heat at the dude for a couple days trying to evaporate most condensation before allowing it to emulsify into the oil and then attempt to drain out later. Just make sure to cover all open areas with rags to prevent any dirt from entering the motor. Listen to the other guys on oil additive to give some additional lubrication in case any water drops are left on camshaft lobes and other direct surface to surface contact areas.
Third, how did the caps pop off?? most likely didn't. somebody removed them for some reason. Just sounds to my like some young boys using the tractor for a play area, and their imagination was running overtime. They may not be your kids, but when I was young, we would have found a tractor sitting outside within a half mile away to play on. Just a thought.