I've never had to deal with a massive hydraulic system but had a 10 gallon system get drenched with water, drained it and seperated it. After filtering it still looked milky so I had it in a steel barrel and carefully heated it to 220f and let it vapor off for a couple hours. Seemed to become crystal clear, let it cool and put it back in. Went on the turkey fryer idea, nice slow smooth heating.
My 2 cents worth .........
1. First off, all mineral-based hydraulic oils are hygroscopic. That means they have a tendency to attract water, just like brake fluid only not quite as bad.
2. Water can be present mixed in hydraulic oil in 3 distinct forms.
a) Dissolved - you can't see this.
b) Separated - what sits in the bottom of the tank (if any).
c) Emulsified - the milky colour you can see.
3. The additive package in the oil is designed to work on water particles in the oil in 2 of the 3 cases above.
a) Part of the package assists in the absorption of water into the oil - (dissolved).
b) Another part of the package is designed to help small water particles coalesce and become so large that they fall out of the oil to the bottom of the tank - (separated).
4. The fact that the oil is milky in a hydraulic system would suggest that the additive package designed to assist in treating water (see above) has depleted to such an extent that it can no longer cope and so the water is neither dissolved nor falls out of the oil and so it mixes to form the milky emulsion you can clearly see.
5. Typically in the case of an emulsified oil you might have in the range of 1000-5000ppm (parts/million) of water actually dissolved in the oil, & a similar amount in emulsion.
6. Careful heating will no doubt drive off the visible water and return the oil to a clear bright colour again, but you are not doing anything about the dissolved water in the oil. The additive has chemically combined with it and nothing you can do will "un-combine" the water & oil mixture.
7. As per my example in 5 above by heating you have only driven off half the water anyway.
8. The critical part. If the additive package in the oil designed to treat water has depleted to a point where it no longer works then what about all the other additives present in the oil designed to prevent corrosion, foaming, anti-wear, etc, are they more than likely not depleted also ..?
Hope this might shed a bit more light on the subject.