I went home and added water and coolant on my lunch. I noticed the water pump was dripping out of the weep hole on the bottom about 1 drop every 5 seconds. Does this indicate bad pump? Could bad water pump cause these symptoms? I did check again and I think there is oil in my water.

There has been an oil leak around the turbo. I thought it was the oring between turbo and intake. Waste Gate arm is completely soaked as is everything else in that area. Is blown head gasket known for leaking oil around cylinder 1-3? This morning it got much worse and there is splatter all over the smog vacuum pods, heat shield, intake tube, turbo, exhaust manifold. When I turn off car i can see oil smoke rising from around waste gate arm area by the manifold.

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1987 300 SDL
2000 E320 Wagon