Water in any of the housings is common in old tractors. While it can be from sitting outside it is not usually the cause. Moisture gets into the housing from the humidity in the air, and the next night it condenses on the inside walls. When the tractor was working everyday the heat generated would drive the moisture out every day. Your tractor had old type oil without the modern additives so it stayed separated for the most part, which is why it was easy to drain off. The small amount that you have left won't cause a problem, but if you really want to clean it up good find some hard work for it. If you put cheap hydraulic oil back in you will be able to drain most of it out easily again. If you put in modern UTF it will mix as yours is now, and you will need to drain all of it annually.
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Today's Featured Article - Listening to Your Tractor - by Curtis Von Fange. Years ago there was a TV show about a talking car. Unless you are from another planet, physically or otherwise, I don’t think our internal combustion buddies will talk and tell us their problems. But, on the other hand, there is a secret language that our mechanical companions readily do speak. It is an interesting form of communication that involves all the senses of the listener. In this series we are going to investigate and learn the basic rudimentary skills of understanding this lingo.
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