If you have oil in the coolant, it is most likely from the transmission oil cooler in the radiator. This is an unusual failure that is quite rare. I know this because my 2015 Tahoe had the same failure. Fortunately, GM and my dealership helped me with some of the cost.
There is a GM service procedure for cleaning the cooling system. It is not just a simple flush.
If you have transmission oil in the coolant, you will need to consult GM Service Help to get the procedure. As I remember it, we had to do the following:
Replace the radiator (the transmission oil cooler is not a replaceable part)
Replace all cooling system rubber hoses (the cooling system hoses are not made to tolerate the transmission oil)
Replace Thermostat O-ring (you may as well put in a new thermostat at the same time)
Replace the pressure cap (it's an easy change and worth doing)
The system was cleansed with a solution of Dawn dish washing soap and water, then flushed with fresh tap water and repeated.
I would also recommend you replace the cooling system "surge tank" with a new Dorman aftermarket unit. The OEM ones are hard to see through and you will want to keep an eye on how nasty the coolant gets after driving for a few thousand miles. The Dorman ones are very easy to see through. You will probably have to do the Dawn soap flush again in about 6-9 months if you get any more residue that shows up in the tank.
It's a pain in the butt and an unexpected expense, but not the end of the world. You should also have a look at the transmission fluid to be sure there is no water in it. Typically, it will not, since the transmission oil cooler runs at a much higher pressure than the cooling system. Best to check, though.
Are you sure its oil. The coolant used by gm for years is Dex-Cool. The additive package in dexcool can form a sludge when it oxidizes. This can happen due to running excessively low on coolant and not changing it but is most likely caused by a slow leak and air entering the sytem. A faulty pressure cap is a common cause for this.
What exactly do you see? Where do you see it?
It Might also be worth a second opinion of what exactly you are dealing with.
I totally agree, a picture of the cap would be good. Is it heavy slime or is it crusty? If crusty most likely just an old cap that could use cleaning or replacement. If slime then more investigation is needed with trans, block, heads, etc.
Run down to the parts store and borrow a pressure tester and see if the cooling system holds pressure. Should take all of just a few minutes to tell of there is a leakdown and more work to do.
I am not going to argue with Autoprof or Dragon2U. Both of their inputs are spot-on. I agree with both of their posts. Further careful investigation is definitely required. Jumping to any conclusion in this circumstance could easily lead to mis-diagnosis, excessive unnecessary work and expense.
If you are lucky enough to just have sludge-like crap on the cap and degraded coolant that looks like it has oil in it, you will get off easily with just a cooling system flush and refresh.
If you have a leak between the cooling system and crankcase, it will show in both. The crankcase runs at a lower pressure than the cooling system and milky oil is usually the first sign of problems.
The stacked plate trans cooler in the radiator has been known to fail at high line pressures when a tuner has been changing the line pressure to make the transmission shift harder or when transmission work has been done that causes a big change. It is for this reason that really high performance applications require the aluminum heat exchanger in the radiator be replaced with a stainless steel one. I’ve been at Ron Davis Radiators several times and have seen the ballooned aluminum ones that come out......
A competent, on site, diagnosis of the situation is needed........ we can spend way too much time speculating and arguing about something that should be diagnosed in a few minutes......
I’m still hoping this works out well and requires very little........
If only like this, I would clean the tank, pressure test the system and the cap. If everything if tested ok I would (flush the system using an exchange machine - possibly done!) then replace the cap and keep an eye on the coolant, the trans fluid and engine oil for signs of contamination. Its may just be just a faulty cap and a lack of maintenance.
You mention its an 04 which makes it possible that the coolant with an expected lifespan of 5 years may be over 15 years old. You also never mention mileage. If coolant has never been changed - and fairly low mileage then one more reason to suspect just a coolant issue.
I can't see exactly what you are dealing with so its hard to give a solid answer. A second trusted opinion or pictures would be valuable
Yes it was actually a little less. It does have 43k miles. I will get the cap tested today. I already had the radiator flushed. I’m surprise the cap was not checked. I will report back. Thanks all for your help and suggestions.
I had the system pressure checked today. All checks out fine. However I had the system flushed again. I have a new tank cap coming from Mike. Plan on keeping an eye on my fluids for contamination. What should my temperature gage run at in your opinion. Thanks again for all the help. Any other input is appreciated.