The original spec up to '71 was a fluid called "Type A, Suffix A", which was superseded by Dexron in 1972. The latest variety of Dexron is Dexron VI; a good brand of that will be fine. Me, I use Chrysler Mopar ATF+4 in my old Torqueflites; it is a superior fluid to earlier Dexron formulations but the newest Dexron is much superior to the older Dexrons, and the older Dexrons were plenty adequate for a Torqueflite. Type F is not correct -- never was -- though some people use it in the belief that the harder shifts it causes are "better". Fact is, Type F is an ancient fluid, inferior in every respect to any Dexron.
The "A" before the 727 is irrelevant. There is no difference between a "727" and an "A727", it's just two different ways of referring to the transmission.
Your dad is right about the milky appearance of the fluid. Usually this is a result of a leaking trans fluid cooler in the radiator's bottom tank. You may also find trans fluid in the coolant. You need to find and fix the problem and change the trans fluid and filter right away. Be sure to drain all the fluid; there's a drain plug on the front of the torque converter, too, accessible behind the sheetmetal cover at the bottom front of the bellhousing, behind the engine oil pan.
Use the newest reusable triple-seal pan gasket; the floppy one that comes with the new filter is much more likely to leak. You get the good pan gasket from a dealer; P/N is 2464 324AB . While you are in the transmission, you'll want to adjust the bands.
But step number one is to find and fix the water leak.
