[dangerous]

Sometimes it's tricky to distinguish between the "symptoms" and the "cause" of the problems. Everyone's input is valid, but Bradical & Mikepellegrini are the ones who keyed on the true cause of the problems. Your OPRV got stuck. Oil pressure was not relieved and the oil filter is the weakest link so it popped. I've had it happen to me first hand. At this point, your oil pressure gauge is useless because your engine cannot manage oil pressure anymore. The OPRV on the '87 should be the one-piece style and is much easier to work with. This is the first thing you should address. There's a very real possibility that your sender unit is fine. The false oil pressure reading is the symptom...the OPRV is the cause.

when you have an oil pressure problem (too high) then you can damage your oil cooler seals or the oil cooler itself. It could happen independently if you're inclined to believe in coincidence, but it probably occurred as a direct result of the stuck OPRV and continued running under that condition. Oil/water mixing can occur from a head gasket, but in these cars, it's usually the oil cooler/seals. Combined with the known factor of your OPRV, and it's likely related. So once again, the oil/coolant mix is the symptom, but the cause is high oil pressure, the product of a stuck OPRV.

OPRV typically sticks if misaligned only after incorrect installation. Otherwise it likely got stuck due to sludge (dirty oil). Oil sludge is drastically reduced when running synthetic oil. You don't need to run synthetic, but oil changes are very important to prevent sludge buildup. I had some photos of inside two 944 engines, one from synth and one without. The sludge buildup was astonishing.

I wouldn't be too quick to buy a new OPRV or sender, both are probably fine. Your OPRV probably just needs a good cleaning. After you fix this, you can address the next phase of diagnosis.