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If you've used water pump lube it will often separate into an oily substance like that. Water pump lube is nothing more than an oil emulsion, meaning that it was whipped into water. As it separates out it sometimes ends up in the coolant overflow. For your sake, I hope that's the problem and you don't have an oil leak into the cooling jacket. The above answer is correct. I would also have a compression check run on this engine immediately. You may very well have a blown head gasket. Serious engine damage will occur if this is the case and you continue to drive this car.

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Q: What could cause a greasy residue in the overflow tank of my 1999 Plymouth voyager?
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