My ls2 was misfiring and bogs down when driving. I plugged my programmer up to it and it says cylinder 5 is misfiring. So I changed spark plugs and wires, didnt help. I checked the oil and its milky.
Could it be just a bad head gasket, or something worse... like a crack?

 

Yes, it could be either. Water is entering your oil somewhere. Likely around the misfiring cylinder.