I bought this Jeep last winter and this morning I checked the coolant reservoir and there is about half a quart of oil in there. I have never seen this before and would assume the last time I took it in for a oil change they would have told me about it but they said nothing. I have never seen anything like this before. Is there any reason for this? I will be doing a couple of coolant flushes tonight to get all of it out.

Hate to tell you but it didn't magically appear in there.

You either have a bad head gasket (which is the more likely of your 98), or a bad head (cracked, warped, etc).

Have you noticed any issues with it overheating?

It has not been overheating even though I have been driving in the heat and heavy traffic.

If it is a bad gasket shouldn't I see foam inside the valve cover?

Also there is no smoke coming from the exhaust.

Are you 1/2 quart low on oil or transmission fluid? The trans cooler is inside the radiator..

Head gaskets....sometimes you only get oil in the water. Other times only water in the oil. Sometimes both. You only get smoke if you get a breech into a cylinder. They don't always fail the same way.

Get yourself some automatic dishwasher soap and use that in your flush. It cleans out the oil really well, doesn't foam up or bubble, and is harmless to the cooling system.

It has been 4000 miles since my last oil change and I have seen very little change in the oil level and have not added any.

Also I am fairly certain I do not have a transmission cooler since it is a manual transmission. Am I right?

Thanks for the dishwasher soap tip.

A long time ago, last century! I bought oil in a blue gallon jug. Later filling my radiator with a "blue gallon jug", I noticed something didn't look right. YEP!

Just a thought, the PO or somebody might have made the same mistake. guess you will know if it does it again.....(the Tempo is still fine Btw.)

LOL!
I hate to admit it. But my son did start to do this. I was so lucky that I caught him just before he started pouring it.

Right. No cooler on the manuals.

Anyone put Bars Leaks rabbit pellet stop leak in there by chance? That stuff contains a lot of oil.

Just got some coolant and dishwasher cleaner so I can do a flush.

I am now thinking it might be a stop leak fluid that the previous owner put in there.

HAHAHA I certainly didn't put any oil in the coolant reservoir.

That's true, it may just look like oil because of an additive.

I used Water Wetter when I first got my XJ and it turned the coolant nice and red.

NO! (I wasn't suggesting you did). Just to be clear "PO" is previous owner. You are the "OP" (original poster)...

Yea, I wonder if I wouldn't start by adding water so the oil on top can overflow out first... (or ...wonder if I DID, (probably!))

Oh I see now, I thought you spelled OP backwards, good to know.