It sounds more like water than oil. Could be it was sitting somewhere damp, there could have been some water in the petrol or maybe the head gasket went at some time.

when I stripped the bike, fuel tanks, carbs etc... you can see areas of brown (rusty water stain) on the engine.. how can I check the head gasket?? checked the oil filler and thats clean..??

Have a look at the oil filler if there's a brown scum on it and if the oil's a greyish colour that can be water in the oil.
Then check the radiator, if you get a brown scum in the top and the water is low then there's oil in the water.

Lastly compression test it that will tell you if the rings / valves and head gasket have a seal. You test the cylinders "dry", if the compression is down then you add some oil and retest. If that result is significantly higher you can suspect the rings, if not suspect the valves. If the valve tollerances are ok then chances are it's the gasket.

It will also be difficult to start and you'll get white smoke (steam) from the exhaust