I have a honda gc-160(powerwasher). Ijust replaced the exhaust lifter and cam gear. I'm getting grey oil with little running time. any clues? the parts were replaced due to the fact that they broke.

Grey oil is an indication that water has entered the crankcase and has mixed with the oil. You need to find where the water is entering the engine.

The pump is run by a shaft. The pump is seperate. Could it be gas? I cant see where water could even come in contact with the motor. The oil is or seams watered down.

if gas is in it, it would smell as so. since its been broken in, that would leave out break in contaminants. so it is water....