There's a LOT of water, and enough oil to make milkshake......
I'm not (yet) an LMTV expert, but one thing I DO KNOW is compressor and compressed air systems. I spent several years working for Roger's Machinery both assembling compressors from parts for the rental fleet and rebuilding recip (piston) air compressors. To this day I'm a compressor snob - my personal garage unit being a Quincy QR-325 on an 80 gallon vertical tank. Completely custom build.... would probably run about $6,000 retail to recreate it.
The compressor could probably use new rings. How many miles are on this unit? Clearly someone swapped the drier..... must have been reasons for that.
That drier cartridge is SIGNIFICANTLY nastier than mine was (no milkshake in mine - just SOAKED in water) - and mine destroyed the compressor. It caused backpressure and it overheated the top end of the compressor - the springs in the disc valves lost their temper and broke into multiple pieces. This led to the compressor building air slowly and really only at high engine rpm like cruising at 50 mph..... and making a lot more heat than it should - one of the discs split into multiple pieces, a chunk of which slipped into the cylinder and punched a hole through a piston. This was THE END for the compressor which not only didn't make any air at that point, if you revved the engine enough it was pushing air through the piston and into the engine crankcase and it pushed a couple quarts of oil out of the engine breather.
My truck has 5800 miles on it. The compressor was not worn out. It was damaged from that drier. I'm concerned because that's a ton of water and also there's oil mixed in with it.
I would recommend a top-end rebuild of the compressor. At the very least get a head gasket for it and pull the head for a complete disc-valve inspection.
Haldex has a part number listing for a reman cylinder head assembly. Might not be a bad idea. Easy and quick.
If you want to pull the compressor for a full rebuild PLEASE send it to the good people at Brake Systems Inc. They are local to me and went above and beyond to find me a core (in Texas), ship it in, and they had it rebuild the same day it arrived at their shop. And it works flawlessly. Can't say enough good things about these guys. Old fashioned customer service:
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Rick