Obviously the first question is how long has this been going on? If the water in the radiator overflow is black or dark gray chances are there's been water in the oil for a while, as I believe is the case with mine bike. Worst case is that the water washed lubrication from the main & con-rod bearings and there's excessive wear on the crank journals; maybe some cylinder scoring.
I won't try to guess what damage has been done, if any. I experienced the same thing on my '07 with > 40k miles. Installed the CJ WP kit w/bearings and am on my second of 2 recommended 500m oil & filter changes. There was some 'residual' foam in the oil at the first change, but very little. There is a slight engine 'buzzing" at about 4500rpm, but it doesn't get any worse at higher revs - doesn't feel like bearing wear or tolerance issues, yet..but I'm keeping a close watch on it.