Is there a little plug on the top of the oil cap? The oil cap should have a vent, if there isn’t a vent then it could over pressurize the crankcase area, then it will push out the easiest escape area. With the pumps we sell at the company I work at you can also use desiel engine oil 15w-40w (example is Shell Rotela T 15w-40 with pumps that use 30 weight non-detergent oil. The little valve that is spraying out hot water sounds like a thermo relief valve and they do go bad if they pop off so many times, they go off when water temps reach a certan tempature usally around 140 deg F. If you let the pressure washer run for over a minute to a minute and a half without squeezeing the gun it will heat up fast. If you would like please send a photo to me and I’ll take a look at what you have.