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Honda 1991 trx250x low compression? milky oil?

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Hi, I just bought a trx250x for cheap, my friend bought it with the attention of fixing it up, he said he seen it run but smoked a lot, he never messed with it so now I have it, I havnt tried getting it running yet. First off the kick lever goes down with my hand very easy, and also when I kick it there's a loud clicking noise near a cable that runs to he head I think its the decompression cable? And the oil is a milky color, any tips on what I should do I'm sure it need a top end and I plan on doing that. Any reason the oil is milky? It sat for a while also but it was all together so not sure how water would getnin engine. Thanks

Edited by ktmnj

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that is air-cooled, you have alot of water in your engine oil.  Drain oil, flush with diesel fuel, drain fuel and change oil filter.  After you get it running, run it with the oil cap off, if you get steam coming out - you still got water in there, run it until steam is nearly gone, drain oil and change oil fliter.

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