Oil in coolant??

[alanhess]

I own a 2000 Boxster S and over the weekend my temperature gauge warning light came on and on checking my coolant level was low. This wasn't much of a surprise as at my last had noticed a slight drop a few weeks ago.

No problem I thought and bought some replacement coolant and topped up. By the time I'd driven the 2 miles home my temperature gauge was a little high and when I opened the coolant cap it spewed out in a brown foam.

My initial thought was that I'd topped up with the wrong coolant and this had caused the reaction so I took it to my local (non porsche) garage for a flush through. However they are saying that it's oil in the coolant and therefore probably a head gasket. Which is pretty serious.
Worse still, speaking to my usual porsche garage they are saying that the boxsters they've had in a similar situation have had fundamental engine block / head failures and have needed new engines. This wouldn't be worth my while given the value of the car.

It all seems a little strange though that this only occurred when I topped up the coolant. There's no white smoke out of the exhaust (just the occasional blue smoke on a start up) and there's no water in the oil. Though the oil level is a little low.

Is this really likely to be a finished engine or could it be something more simple (and less expensive!)