427 SO overheats and loses water

[chas427fe]

Took it out Thursday.. We drove it part in back roads and part on the interstate. Temperature hovered between 195 and 200. Came back dropped my passanger off and took it out again and combination of backroads and interstate. Had it up to 6000 RPM's and cruised some. Total miles were about 20 miles. No incident. Checked water level after 2 hours and it appears real close to what it was when I left. Dipstick had grey sludge on it. Took it out Saturday and drove it 30 miles each way to a car show. Got to the car show was a quart low on water. Drovw irt home, slower this time and it was low again on water maybe a pint. The dipstick again had the grey sludge onit both times i checked. When I removed one of the valve covers it was coated heavily with grey sludge. The valves and springs and the rest of the engine were clean, just oily. Drained the oil and no water in the oil. Oil pressure remained 75 PSI-85 PSI during all of this.