I just purchased an 04 Trailblazer with 134000 miles. The truck looks to be in excellent condition but I notice when I start the truck the Oil Guage reads like it should (around 40-60 lbs) but after a few minutes it goes to 0. The truck runs great with no major noise but there is a little valve rattle. I checked the oil level and it was about two quarts low and when I added the oil the noise subsided somewhat. I did notice however when I removed the oil cap there was a milky type of residue inside the cap. After driving for another 10 miles I looked again inside the cap and there was none after I had wiped it clean earlier. Is this an indication of major problems within the engine or is there possibly a less ominous conclusion. Thanks

Also, there is no milky substance on the oil stick only on the cap. Also, there is no evidence of oil in the radiator or reservoir and the engine temperature stays constant at 200 degrees and there is no evidence of overheating. The water reservoir remains at the same level and does not seem to be losing any coolant

 

Milky is a sign of water/antifreeze mixing with oil, and that will screw your bearings. Not sure about the trailblazers, but on the blazers, it's the lower intake manifold gasket.

 

Milky in the cap is not automatically a sign of antifreeze in the engine. My 95 S10 did that... No antifreeze in the oil. 40000 miles later at 285000 it round like new.

just a little moisture condensation in the cap ( which is cool compared to the engine internals) is enough to do that. That can be caused by a faulty PVC system or very hugh humidity.

If theres moisture in the crankcase vapors the PCV system should suck it out and run it thru the engine.

Check the PCV system first.