sure thing
i'm pretty sure it's probably the filler/dipstick cap.
i just mentioned the engine because i think the hyd pump is mounted on the engine on these machines and if the pump has a bad seal and the engine has a condensation problem and by some strange chance the system has suction on the seal it may be drawing the contaminated oil in through that seal. Yep that sounds crazy but it's not impossible. Something that weird though you would definitely be seeing issues with the engine oil and possibly the coolant too.
you didn't answer my question about if it sat outside though?

Thanks Swoop. Will check these items out. Appreciate your time and your response!!

hey johnnyb,
sorry i didn't see this one.
water in the hydraulic?
so my first questions would be to ask what does the engine oil look like? is it the correct level? and the same with the coolant. does this unit sit outside?
have you been having to adjust any of those levels?
the only other suggestion is to check the breather/dipstick cap on the hydraulic tank, make sure it is sealing good when you put it back on, no cracks in it, the usual stuff like that.
Even in cold weather you shouldn't see any water/moisture in the hydraulic oil at all. If there is enough to make the oil get milky you have to be getting water in it from somewhere.