2009 with 318,500. The previous time I checked the dipstick, maybe 200 miles ago, oil still looked new yellow from the most recent oil change. I made at least 4 dozen or more 1.5 mile trips in cold weather (almost all between below freezing to well below freezing). Not even one longer trip to cook off any condensation (Yes, I know that's not good). The most recent time I drove home the 1.5 miles (45mph max) the touchscreen didn't power on, but there was no red triangle or service engine light in the cluster. Next time I started the car I got the red triangle in gauge cluster and an oil can light at top left corner of the touch screen. Oil is no longer yellow but looks milky and oil level has increased from little over 1/2 way between the marks closer to the full mark, so more than a trivial amount. Next day I started it couple of times just for a few seconds and no warning lights. My scanner (Xtool D7S) reads no engine codes at all. I assume that low oil pressure should cause a code? How long does low oil pressure switch reading need to exist before a code is logged? There is NO WAY that condensation over maybe 100-150 miles of 1.5 mile trips in well below freezing weather could noticeably add to the engine oil level, right? (I have owned the car for the last 50k miles. Aside from 3-4k oil and filter changes, 1 CVT fluid change and 2 air filters, injector cleaning spaying brake fluid and 5 spark plugs, I have stupidly neglected rest of the engine, including EGR and the cooling system, other than checking the coolant resistance to freezing.)
if a head gasket leak on a Gen 2 is from coolant to oil, will a chemical head gasket leak tester like LISLE 75500 show anything?
There is no EGR, you may continue to neglect it. Assuming this is actually a 2009 and not a 2010... Would a leak tester always work? I would imagine not. There must be some case for some car (maybe not this one) where a gasket breaks between an oil passage and a coolant passage, but not into the cylinder itself. If that happened, there wouldn't be exhaust gas in the coolant. The OP describes what looks like coolant in the oil. Does it also look like there is oil in the coolant? We suspect that those two are sharing space somewhere, so it is pretty likely that both would be contaminated. Buy a dye detection kit (dye, UV flashlight, UV protecting glasses). Find some cloth that does not fluoresce* and wipe a little oil on it from the dip stick. It should not fluoresce. Add the dye to the coolant and run the motor briefly. Wipe the oil onto another part of the cloth and check to see if it now glows. If so, you have your answer. * many detergents include chemicals (whiteners) that fluoresce under UV. Blue shop towels usually don't fluoresce, regular paper towels might. Newspaper probably doesn't.
After more than a decade on here near every day I can assure that Gen2 engine failure has never shown up as headgasket failure and I challenge anyone to find a link proving otherwise. Gen3 Prius on the other hand is endless headgasket failure. Seems like with Gen2 its piston or rings or valves or hole blowing out of the lower block from rod failure up near 400K miles... But because of Toyota's massive incompetence with Gen3 engine design, headgaskets are now wrongly suspect in all generations of Prius.
The typical high mile gen2 engine problem is excessive oil burning which can lead to sudden failure. Your engine is very high mile. Gen2 engines do fail and there are plenty of people who replaced their engines or junked the car. You need to change the oil and coolant asap and hope for the best.