2000 XJ Overheated. cracked head or block?

First some background. Hello my name is Irving and i live in Arizona, on 01/02/2017 i went to Flagstaff in the xj (2000 4.0L 4x4 Cherokee Classic) with the family to have some fun in the snow, on our way back i noticed the xj was running a bit hot (the line after the 210 mark on the gauge) i pulled off on the next exit to check if the electric fan was turning on and as soon as i stopped the engine shut off and smoke came out of the hood with a milky oil running out of the left side of the engine by the air filter box. I automatically thought blown head gasket or cracked head because when i purchased the jeep (from auction it was a recovered theft) the jeep did not have any water or coolant so i thought that was strange and i filled it up and then checked it a week or so later and had to fill again. So Coolant Loss, tried heater on our way back from the snow and no Heater so again I suspected cracked head. Had to tow the jeep back to Phoenix and i took it to my mechanic and we had the head pulled and sent to a machine shop to check for cracks. they said no cracks, had rockers and springs replaced, new gaskets, valve lifters, thermostat, water pump, and hoses replaced. put everything back together and i picked it up and after about 30-40 miles started feeling the jeep misfiring and it threw the CEL, took it back to the shop and it was saying misfire in cylinder 3. mechanic said could be a bad sparkplug and dropped the jeep off the next day where he replaced the sparkplug and still misfiring. (when i took the jeep that day it went into limp mode as i pulled up) he removed the valve cover and saw the coolant was mixing with the oil so he said he would remove the head again and take it to the machine shop to check and that it could be a bad head gasket. so i went to Autozone got a new gasket, machine shop said head was fine and then again put everything back together and took the jeep home and this time it was that same afternoon started running rough and CEL light came on. Took the jeep back and said the only other option could be a cracked block but the jeep has good compression, ran great before overheating. i told him i wanted a second opinion from a different machine shop so i recently took the head to a different shop and they told me that it looks like it was not resurfaced by a machine and it was done with a band (no clue what that means) and that they will check for cracks so waiting on the results from there. oil has chocolate milk color. any ideas or suggestions if i am steering in the right direction suspecting the head is cracked. have read online on various forums that the 4.0 block is very difficult to crack and that the 0331 head is notorious for cracking. I'm in between just buying a used engine at a local wrecking yard with 130k miles for $900 or a $455 head from Odessa Cylinder heads. I don't want to get the head and then again have issues, been 3 months without my jeep. My jeep has 154k currently.

Did anyone look at the old head gaskets that were coming off? They can usually give clues. I usually bring them to the machine shop. In some cases heads can test good at room temperature but open up when they're hot. A good machine shop will test it thoroughly.

On 0331 heads, the head commonly cracks between the 3-4 rocker arms. You can remove the oil filler cap and look straight down and if you see pure coolant there, or coolant stains, the head is cracked and needs to be replaced.

Without knowing the quality of the machine shops involved its hard for me to say if its a head or block. Some places that call themselves machine shops/head service shops are really quite horrible. Today I think most cut heads on a computerized machine. Some places have been known to do crazy things like put them on a belt sander.

thank you md21722.
I didn't see the original head gasket when it overheated as the mechanic removed it and replaced with a felpro from autozone and as for that one i took it back to get it exchanged as warranty for a new one. I think it is the head as both times the coolant has mixed with the oil in the head causing it to start misfiring. I am just waiting for the machine shop i took it to confirm. do you know of a good way to get rid of the chocolate milk oil effectively? would you suggest using seafoam and then oil change after driving it a bit?

PS I think thats what the guy at this machine shop meant that they must have used a sander to instead of properly resurfacing the head.

You are correct on the block being tough, they really are. The heads need to be watched closer. If it turns out that the head is NOT cracked, it could be that it got warped enough from the overheat to the point that any new head gasket is going to fail. The bottom surface may simply need to be shaved down properly at a reputable shop, and NOT with a belt sander. Those kinda guys need a forehead slap. Keep us updated as to the progress, we all learn from each others experiences.

As for cleaning out the oil, anytime the head comes off it's recommended to change the oil early on, no more than 500 miles. Some shops let the engine warm up and then change the oil. You ALWAYS end up with crap in there from gasket material, etc. The filter will catch the solids. In your case, I'd be changing the oil a few times at short intervals, like 100-250 miles, and call it good. If you want to go a bit extra, try the Shell Rotella Synblend T5 10w-30. It's dual rated for diesel/gas engines & the diesel oil typically has better detergents. Wal Mart often has it on sale for not much more than their SuperTech. Or go to a farm & ranch store and buy the Lube King or whatever it is that they have. Most of it is made by Warren Oil same as Wal Mart and works just fine.

Update from the Machine Shop. Cylinder head is cracked between the third and fourth cylinder. SMH. It was a hairline crack, took it to the mechanic to show them so they do not continue to send work to their machine shop they originally took it too as they said it was not cracked twice. Ordering a new head from Odessa Cylinder Head tomorrow and then will just have to wait for the head to come in. Hoping i will her running soon so i can go riding

Thanks for the update, good luck to you.