My old Brown Wagon was a lot like that... It was advertised with a blown motor, but heaps of rego. I went and had a look at it, and it was running like s$%t - kinda like a badly blown head gasket, but without the signs of a blown head gasket.
Took it for a wheezing, coughing test drive, and then checked the oil for water (figuring maybe something was weird WRT getting hot, opening up the leak or something). The oil was WAAAAY over-full. No oil, not fuel in there, just way too much oil.
I bought it, took it home and drained 7 or 8 litres from it (which brought the oil level back to a sensible level) and it ran perfectly... I'm guessing the previous owner had been told something like "any time you see the oil light come on, put some more oil into it", and that they'd taken it literally - which means including everytime the engine was started...
I know this sounds like one of those urban myths, but both DAZDA and Ballast can confirm it!
Was speaking to the guy who bought my old rally car yesterday. He drained the gearbox oil, and was thinknig "Jeez, that's pretty clean, seeing as it's done... ZERO rallies"... He'd changed it before the last event of last year, which got called off... So he effectively dumped a full gearbox worth of oil that had done a grand total of 20kms at gentle road speed.