Could be. The carb sits higher than the engine and off to the side a bit. I don't think it ever gets very warm at all. The line from the PCV runs up hill and away from the block so it stays pretty cold too. But, you may be correct that the oil had excessive moisture. After it pumped most of it out and shutdown, I cleaned the PCV with carb spray, refilled it and it did it again, so I'm not sure that is the answer. It has never happened in our "normal" cold weather. I've never seen sub-zero in my life until Tuesday when it was -8 at 6:00am. I know propane generates moisture when you burn it. I was suspecting that was the culprit. The self test runs 15 minutes once a week. A local Generac repairman said he has worked a few this week with the same issue. Clean the PCV and new oil and off you go. I think I'll do a Seafoam run and oil change next week.
All combustion generates water. Propane does make a lot, but not all that much more than gasoline. NG makes even more.
As I see it, the PCV is under manifold vacuum, so air should be flowing from the crankcase into the intake, and not the other way. Blowby gasses that get into the crankcase would bring water in, but you shouldn't have a lot of volume of that, and once the engine is warm, there should be none (unless you have bigger issues). Which means that exhaust water is not the likely source.
Water naturally gets into the crankcase through moisture laden air and collects via condensation. This small amount is supposed to be evaporated off when you get the engine hot, but that example car that was driven by the little old lady to church only on Sundays and never got the oil above 212F, is a situation where condensation will build up in the crank case over time to the point that it becomes a problem. This is common on generators that are exercised for too short a cycle. Particularly because most generator exercise cycles are done at idle. I think you'd be better off with 30 minutes every other week, as opposed to 15 minutes each week, but talk that through with your service guy. I'm sure they're learning about cold too. Most generators have winter kits available, and I know Generac does, but as I've learned, even those are not without flaws.
I wouldn't bother with the Seafoam. Your actual time spend running under load will dry out everything as well as anything could. Just change the oil based on the manufacturer's suggested change interval now, now that you have new oil in it.
And
keep an eye on the carb! Carburetors naturally get chilled to lower than ambient temperatures by the air expanding in them, so they need to be heated when in freezing conditions. A common and simple system used is to have a chimney pipe that leads down to the exhaust manifold and up to the carb. Cool air is warmed by the manifold and heads up to gently warm the carb.
