The only thing thats going to get all the water out the system is changing the oil several times and/ or time it'self , I would take a hose off an attachment or make up a hose to couple to the machine's quick couple , have someone hold the hose in a contain , start the machine and turn on the aux till the oil flow stops , shut the motor off , refill with oil and run machine thru all the functions for an hour or a days work , then drain and refill again , after that it will probally still be milky but it you work it for a few days it should evaporate the water out and clear up , if not flush and refill again -------there are some hydraulic filters sold that will remove some of the water , they are expensive and don't take out mass quanities , ---------as afar as what oil to use in your hydraulic system , that is a can of worms to open , I'd say use the hydraulic oil and you will fine , I have read Bobcat bullutins about three years back saying to use thier hydraulic oil in place of motor oil , personally I have always , and still do use hydraulic oil in a fleet of rental and contractors Bobcats for the last 25 years and have never had a problem from it , personally I feel it was a mistake in the beginning for the manufactures to use motor oil , I think it was more of the covenence of having one oil for the whole machine than it was really better for the moving parts , today the motor oil isn't the same as when those guidelines were thought up and I think with todays engine oil additives that using motor oil could be more bad than good , just my .02 cents