Thanks for the ideas. I sure hope I don't have two problems, especially two expensive problems!!
I checked and didn't see any milk colored substance on the underside of the oil fill cap, but I didn't find any oil on the inside of the windows or wet carpet either. I am really stumped! I do, however, think there is a direct corelation between the water loss and the defroster. Seems as though every time I use the defroster for any length of time I need to add water to the radiator. This morning was a good example, I had to add quite a bit of water and last night I sat and waited for forever for the windows to defrost.
A few weeks ago we had a cold snap and I would let my car run in the morning with the defroster going so that the ice would melt off the windshield. Then my heater seems to quit heating for awhile, but then it sort of fixed itself. My mechanic doesn't want to start replacing things only to find out it was something else so I am sure he isn't sure if it's heater or head gasket either. I will ask him about the leak down test. He did some compression test already.
Thanks again for the help!