I've replaced the head gaskets, no cracks in the heads and no obvious external water leaks, so there must be some sort of an internal problem in the crankcases. The freeze plugs are not rusted through and there is nothing obviously wrong externally. These motors run vertically split aluminium crankcases joined together with an internal 'O' ring to seal the water gallery from the crankcase.
The decreasing level of water in the radiator is matched by an ever increasing level of emulsified oil on the dipstick.

Hasanybody ever experienced this problem before please or does anybody know a possible cause for the (internal) water leakage? Could it be internally corroded crankcases or is there possibly a simpler solution?
The heads are not warped, the motor has never overheated (it still has the reconditioners seals attached) the head stud tightening sequence was followed and the intake manifold gaskets are both good. The welch plugs in the heads are also in place.

This is not easy problem to diagnose, as there is nothing obviously faulty externally and the motor was running fine until it decided to mix the water with the oil.

l suspect the problem is internal which will require a crankcase split to decide what is going on.

Did you get the head pressure tested before you replaced the head/gasket?
did you check the head for warping?

start wit the intake gaskets an then check the head gaskets check all bolts an did you use the right seqence on tightening the headbolts.

We had a problem with an early subaru at my workshop a while back, we tried everything that u did, to no avail.
We contacted subaru & they told us that the material the heads were cast from was faulty & under pressure when hot the heads would become pourous & allow water to flood into the crankcase, they told us it was not a usual occurence but probable if we have exhausted all other avenues of investigation & come up with nothing.
We changed the heads, & hey presto the water leakage into the crankcase stopped.
The best way to check the internal seal is to drain all the oil from the crank case, leave the plug out & put the cooling system under pressure with a pressure tester, if the seal is faulty, water will come pouring out the sump plug hole, if no water comes out then it may be that u have pourous heads.