Yes, a head gasket can blow and cause the engine to overheat. Happens all the time. Yes spaying cold water on an engine that is at full operating temperature can possibly do some damage. Not likely, but possible. Spraying water on a warm or cold engine will do not damage to the engine. It may however damage parts such as the alternator, or some sensors. Never use a high pressure spray.
Intake gasket leaking on the inside of engine.
Blown head gasket
Water in the oil is a sure sign of a blown head gasket. Stop driving this car until you have this repaired or you will do serious engine damage.
It can allow water to mix with the engine oil and destroy the engine.
intake manifold gasket,head gasket,cracked head,cracked block. was it overheated? was cold water added to hot engine?
Blowh Head Gasket
Water in the oil is a telltale sign of leaking cylinder head gasket.
most likely an intake gasket
Blown head gasket or cracked head.
head gasket is blown
The head gasket is gone and water or coolant has mixed with the engine oil. Replacing the head gasket is no big deal.
Usually when the cylinder head gasket is blown (broken or damaged). It cannot be repaired but has to be replaced with a new head gasket.