If there's water in the lower unit...

[BoatNoobie]

will the entire oil be milky or just streaks of it here and there?

I changed my lower unit a couple of weeks ago. It didn't start off milky at all. Was draining that dark dark green color. Then see a few milky streaks coming out for a bit. Then it was fine again. Then a little bit more. I'm hoping maybe some water just dribbled down the motor and mixed with the oil as I was draining, but you never know. It was raining and the motor was also sitting for a few weeks.

[EuropeanAM]

Very unlikely that water sitting in the engine (or propshaft housing) created milky streaks (as it's never been "mixed" with the lube).

The book answer is that there should be absolutely NO milky appearance.

In reality- one or two minor streaks MAY be evidence of a leak (perhaps even a drain plug screw), an over-filled condition, or residual from some previous leak that was addressed already.

The only ACCURATE means of knowing for certain would be a pressure test of the gearcase.