well I would suggest changing your radiator fluid if its been watered down, it may not keep the car cool enough with tomuch water in the system. Plus it rusts a bit and turns orange with tomuch water in it.
Far as my oil pressure dummy guage goes I figure as long as I see some reaction out of it I'm happy. hehe, Try an oil change, 5 quarts and keep an eye on it, such as a puddle under it, also look at the bottom of the car, that might be a good sign to see if its leaking oil, my oil sending unit went out and I had plenty of smoke under my car, it was all over the exhaust making a nice pile of smoke out the sides.
But if your burning it, looks for blue smoke, and a oily deposit on the rear of the car, you might see little black dots on the body.
Also pull the spark plugs, there are some rules about looking at them, I usually look for oil, if that is the case your might have some internal leaking into the cylinders or some leaking around the valves. New head cost me about 20 bucks at the junk yard and about 50 for pressure check of it and a few other valve things the shop did.
Check for cracks also. Clean the engine bay, with a spray engine cleaner and then wash it, you may find your oil problem thru one of these searches.
hope everything goes well.