If you can't get a proper reading, the car might be really low on oil. If that's the case, the remaining oil could be getting burned up.
If it's got some kind of a rainbow effect, that sounds like contamination of some sort. If it's milky, that could be coolant in your oil. That's usually caused by a cracked block or a blown head gasket.
It could also have gas in it from a faulty fuel system. The fuel overflows and gets past the pistons. That's no good because when the oil is diluted with gasoline, you're not getting any kind of lubrication.
If the oil light is on though, I would not drive the car, especially after what you're describing with the oil. I would have it towed to the shop. It could be the difference between replacing something minor to replacing the entire engine.