I am one that looks for the worse case and cover ups. That may be wrong butI have been taken in the past and do not plan on it happening again if I can at all help it. With that said letís look at your story. You looked at this tractor and could not find any problems. Oil was clear with no water and looked freshly changed. You go back in a few days and now find water in the oil and from what others say you want to believe it is condensation. You go back a third time and run the tractor and see bubbles of air in the radiator.
I think you know the answer to your questions you just do not want to face the facts written on the wall While that may sound harsh I still think it is true.
Not seeing the tractor and with only what you tell us and the pictures to go on I would have to guess and say....... This owner removed the thermostat and changed the oil to cover up an internal water leak hoping someone would buy it with one visit. I would also be willing to bet that if you were to tell this guy no deal he would change the oil again before the next sucker came along.
If you want to investigate furture you could change the oil; run it; and come back the next day and see what the oil looks like. Or better yet put a thremostat in it and see if it over heats.
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