So the air filter has holes in the bottom of it and sucked up water into the air intake. The water mixed with the oil and caused the engine to start burning coolant. Ive drained the 97 ford thunderbird's oil and coolant, but im unsure of what else to do after. ive cleared the engine out. The oil on the dipstick was a milky color and there was little to no coolant in the engine when i got home.
Your premise of how the water got into the oil does not compute. It doesn't happen that way. The engine has holes in them called cylinders. Each cylinder has chunks of metal in them called pistons. Each piston has rings on them which seals the pistons so that the air/fuel and exhaust stays trapped in the cylinder. If water were to get into the cylinder as you suggest, it has no place to go. If you got water into the cylinder as you suggest, the engine wouldn't run, as it would do what is called hydrolock, which always stops the engine from running, but if it happens while the engine is running, most often causes complete catastrophic damage to the engine. Also, you would have to completely cover the air intake to get it to suck up water. Just having the holes in the bottom of the intake system is not a sure way to get water into your engine.
I believe that is going on in your case is, you have a blown head gasket, which has allowed water from the cooling system to enter the crankcase and contaminate the oil. The fact you are stating the engine is "burning coolant" is a good indication of this. This seems the most likely rather than the alternative which you have proposed.
Even if what you're talking about did happen the way you state, you are going to need engine work done (most likely head gaskets) in order to fix the engine, if it is fixable at all. You won't know what needs to be done until you get the engine out and checked by someone qualified.