Lube oil won't boil at atmospheric presures they coke and smoke....
Because of all the additives in motor oil it will try and keep water in suspension locked up as a way to protect the engine. Get the oil above the boiling point of water and most of this will come out.
As I recall at cracking plant we could get as much as 10% water in our condensate in winter because the oil often wouldn't get hot enough in the engines to flash off all that water. Not to say the oil was 10 % water some water was mixed in from anti freeze spills and water that could get mixed in from all kinds of other places after it was drained from engines. And the condensate was only a fraction of light ends that boiled out there would also be varsol, fule oil and gasoline all mixed up into a slimy yellow snot that smelled like stale gas