Could water be coming from trapped humidity under cover entering engine via crankcase breather as engine cools down after use? i.e. fresh condensation might be getting into the crankcase after each use?
Otherwise I would say keep flushing oil. Would assume like most engines once the oil gets hot byproduct water from combustion gets evaporated out before it severely contaminates the oil. The wheeline driver probably operates for extended periods of time so this is a head-scratching conundrum.