The making oil thing must be regional, here in FL I've never seen or heard of it happening to anyone I know, just rumors about it being a possibility for motors that idle all day. Maybe it happens in areas where the water is cool enough that the motor never gets warm enough to steam off the fuel blow by.
Was it in fresh or salt water? If it's running good now with no new noises then there's reasonable chance that running it with the water in the oil didn't do significant damage. What you don't know is if the bearings started to rust when it sat, as that would just make things wear out faster. Your two choices are take it apart and inspect it, or put new oil in it and use it. If it were my motor I would take choice B, especially if it was fresh water. If you haven't yet, get it nice and hot once the new oil is in it to help steam off any remaining water. If it's running OK now then I would bet $5 that it's going to be fine.