It’s normal for the gear lube to expand some as the gear case gets hot internally. Foamy lube is not a good sign nor is the sheen on the water, most likely there is a leak which is letting water in. This can damage if not destroy the gears. I would have a short pull done to drain the lube to determine how much water is in it. If not bad refill and relaunch but get on the schedule to have the drive resealed.
1997 Silverton 362, 7.4 Crusaders
1997 2400 SCR, 5.7 Vortec / Bravo 2