My 1998 Honda Civic LX appears to have oil sludge in radiator overflow tank. Mechanic says I need to replace engine or buy a new car. What would cause this to happen. Have been very faithful in car's maintenance over the years and am only owner.
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There is an unwanted passage between your oil system and your cooling system. Probably the most common cause of that is a head gasket with a leak between the two, which could be caused by high compression/detonation (there are several possible causes for that including incorrect ignition timing, low octane gasoline), an engine overheat, uneven head bolt torques and/or a defective head gasket.
It could also be a cracked engine block. That could be caused by uneven heating/cooling (an overheat could do it), or from inadequate freeze protection resulting in frozen coolant in very cold weather, or other mechanical defect. If it is a cracked engine block, I think you really are in for an engine replacement. Even a head gasket replacement is expensive (~$1,000) on overhead cam engines, which Hondas all are.
Before you replace the head gasket or engine or car, this Steel Seal stuff might be worth a try. Here's a Scotty Kilmer video on that. I've had it help on an older BMW, the only car I tried it on.
If you want to figure out whether it really is a blown head gasket or not, here's a Scotty Kilmer video demonstrating a test kit, but if there's oil sludge in your coolant, you definitely have some problem.