My first tractor!!! (and a few questions)

My Massey Ferguson (think it�s a 20 industrial) with manual shuttle trans, seemed to have a lot of water in the fluid and would not lift the box blade on it more that a few inches. I got Napa �High Quality GL-1 90 wt Gear Oil.� I drained the old oil, put in � gal of the 90 gear oil and ran a few minutes, then drained. I did this twice, then filled with the new oil. It immediately became opaque and milky with either water or air. The hydraulic lift still behaved exactly the same. I took the box blade off (easily 400 pounds) and the lift arms came all the way up, but slowly and jerkily. I worked them up and down a few times, then put the box blade back on. Same behavior. I did notice that I could shut the tractor off and it would hold the blade up the few inches it had managed to get it without dropping hardly at all.

Next, I drained the new oil, and filled it with pure diesel fuel. Wonder of wonders, that massive box blade lifted all the way up in the air as far as the arms would go. Sometimes it is slow and jerky and sometimes it�s a little faster. Sometimes it comes part way up fast, then stops and continues all the way up real slow and jerky. So, my question is, do you guys think that putting the thinner Permatran III spec oil will solve the problem, or should I take it apart first, and check things out. I hate to blow another $60 for oil after I just spent $50 if that�s not the problem. Thanks for any help!

I can't see how even the diesel was getting through it. I spent 45 minutes with a wire brush scrubbing it under the surface of a bucket of diesel. I put it all back together, and refilled with Permatran III equivalent. The hydraulic lift works like it just came from the factory!! I can lift that monster box blade up and down so fast that the front of the tractor bounces around. It holds the setting anywhere I put it, and only seeps down very slowly when I turn off the tractor with it in gear. If I have a problem with the thin oil (the temp is in the mid 90's here) I'll drain some of it and mix in some of the GL-1 90 weight gear oil I have left over from before.

There were some alarmingly large chips of metal in the bottom of the case, but the gears I could see looked good. I used a suction gun to squirt diesel in there repeatedly with the drain out to get most of the crud out. I think I got most of the water also, because it's not milky anymore.

Thanks a lot for your help guys!
Now I will turn my attention to the brakes...
When I came in at eleven pm last night after my diesel bath, my wife decided that my gun collecting was a better hobby (I sold part of my collection to buy the tractor) :-) Too late now!

I read a lot of past discussions on here about the oil in these Masseys with combined systems. Some said the weight was not that critical, but the GL-1 spec was. Others say (including Big Dean) that the Permatran III spec oil is better (even for old tractors) as long as your hydraulics aren't too worn to use it in the summertime. I bought the 90 wt GL-1 because it's hot and the tractor is very high hours.

So, based on the behavior described (very little lift on 90 wt GL-1 and full lift on diesel fuel) should I try the thinner Permatran III, or should I tear the thing down and check out the hydraulic pump, etc.? Why did my new oil turn milky immediately? Do I still have a lot of water, or is air getting injected somehow?
Thanks for your patience and help!