I was told that by changing oil filter housing seals this would solve my oil in reservoir issue. I just don't understand how coolant bypasses here??
It's not tranny fluid and already checked compression all good.

 

That's possible, it uses engine coolant to cool the oil via the oil filter housing. There's a gasket in the oil filter housing that can fail and allow this.

Also, this is a new development on m113's at this age: there's another gasket between the timing cover and the engine behind the water pump that has started to fail, causing oil to mix with coolant. The gaskets are both cheap, but for your sanity's sake you should hope it's the oil filter housing. That's not difficult to take apart and is right on top of the engine. The timing cover requires much more disassembly, most of the front of the engine needs to come off.