Sorry for the confusion, I do have an '86 300SDL with the 603. That is the car in question.

I did some more looking, I haven't taken the turbo, or the exhaust off yet, I found the exhaust-to-turbo bolts were loose, as were the ones on the EGR (which looked like it was leaking). I took the EGR off, made a block plate, new gaskets and re-assembled, cleaned, drove and it's still doing the same thing.

I did find that the EGR is leaking liquid (unburned) oil out of the top. My friend (who knows much more about engines than I do) told me that it could be the exhaust valve guide. What does everybody think about that?

I have to go to work now, so I can't work any more today. I would like to take the turbo off tomorrow and see what it looks like inside.

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My Primary Driver - '85 300CD - 4-speed conversion, 2.47 rear, lowered, euro headlights, rebuilding (not restoring so much)

Wife's - '08 Saab Sportcombi Aero

Riding a '03 Yamaha Warrior