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VOLVO S40 - Salad Days

I have a 1997 Volvo S40, 122,000 miles on the clock. Engine is the 1.8, 16v. It does an hour's journey every day, and the oil is changed every 5,000 miles. The problem manifests itself with mayonnaise on the dipstick. Only in the last couple of weeks have I noticed a drop in level in the coolant header tank. No mayonnaise at the oil filler. I thought that I had solved the problem last year when I eventually plucked up the courage to have the head redone. Unfortunately it has not solved the problem. So I need to try something else. I have had the header tank checked for combustion gases. This came out negative; perhaps I should have had this done before changing the head gasket. I have emptied half a container of RadSeal into the header tank. Any suggestions?

1. Breather pipes? Not sure where they are, can you advise?
2. Water pump? Just a place where water and oil may be able to mix.

And quite separately, a question regarding oil for this vehicle. For a long time now I have used Halford's best 10/40 (part synthetic) with a Volvo filter. Is this oil still appropriate for such a high-mileage vehicle?

Are you sure the only traces of mayonnaise are on the dipstick? Try running your finger around the lower rim of the oil filler hole or, even better, checking the inside of the cam cover. If this test shows no sign of mayonnaise, then it's unlikely to be a condensation problem, but rather one of a water/coolant leak into the oil. This would probably be past the head gasket or, if you have some form of oil cooler fitted, it could be at this point. It's most unlikely to be at the water pump.
However, if as I suspect this finger test also shows traces of white sludge, it could be condensation and the situation may improve as the weather (hopefully) does. You say you do a one-hour journey every day, but depending on what type of trip that is, the engine may still not get hot enough for long enough to steam off all the condensation.
It may be that the engine is not getting hot enough anyway and perhaps you need a new thermostat. Or a bit of kitchen foil over the lower part of the radiator.
Most outfits recommend a 5W40 oil for the S40, so your 10W40 should be perfectly okay for your high-mileage example.