1987 YJ Wrangler (AMC 258) oil issue?

I've had some issues with my YJ with the original AMC 258. First things I did were replace the factory carb with a Weber and pressure regulator, and replace the fuel pump back when I bought it (May '12). Replaced the clutch slave cylinder after it went out. But I noticed after driving for a while, I'd notice the clutch start to slip as if there was oil on it. I assumed the rear main seal.

So I replaced the rear main seal and found a faulty oil pan gasket, which I also replaced, along with the valve cover gasket (bolts were hand-tight). For the most part, the problem went away until about 45 minutes of driving.

When I got back to my house after driving ~130 miles, the oil pressure hit zero. Let it sit for a couple of days (couldn't check for oil on the ground because of the rain) and I checked the level, it was below the dipstick. Started it up and checked the oil again with it running, this time it was several inches up on the dipstick (so the oil pump was working) but the oil looked thin, almost watery. Had pressure this time but there was smoke coming from where the dipstick goes into the oilpan.

I did fill up the radiator before I made the 150 mile trip, and the water level was still where it was when I left. Any ideas about the low oil pressure and seemingly watery oil? I plan on draining it and seeing if there is any oil/water separation. But I'm not experienced with these engines, so looking for any help.