automatic transmission or standard???
if its a stick shift, drain the bad oil, fill it with good oil, drive it about 25 miles and while its still hot drain it and refill it. It might be a good idea to do that again and put in a bottle of lucas oil conditioner. Ive never seen gear oil "wear out" and turn white. thats water. for water to get into a manual transmission you may have a cracked case, perhaps they bottomed it out and banged the truck off a rock. there may even be a hole in it.
if its an automatic, drop the pan, change the screen, put it back on, fill it, run it till its hot, drain it, repete till the fluid is clean. if you have no drain plug in the transmission pan, dont bother putting a new gasket on the pan IF your old one is in one piece, so what if it leaks a bit your going to drain it anyhow. on your last drain, put in a new screen, a new gasket and seal it up nice and tight. refill it and dump in some lucas auto trans conditioner.
water can get into an automatic from the bottom of the filler tube, where it sticks in the transmission, if the O ring is gone or bad, it will let water in, or as said before, a flood will have gotten water in the dipstick tube.
in any case if it shifts good after you do all this you may be ok. water will do less dammage to a manual than an automatic. but if water is in a manual then you have a cracked case.
be prepared for either kind to go boom on ya soon... water=bad.
is there water traces in the motor oil too?
Ive got an 85 nissan with a 5 speed that will be getting parted out in april, more than likely unless gas goes up more then i will have to patch it again for another year.
IF it runs good, the trans is no big deal, a dime a dozen in a junkyard.