GSXR,

I have a 300SDL with the same engine you have. Assuming my assumption is correct, I think I may know why the engine is leaking oil onto the exhaust manifold.

Now this is where I have to make an assumption because I haven't lifted my car for a while to look underneath at the same area you have on your engine. If you look at the picture you took, you will see a circular area just to the right of where the leak starts. That circular area looks suspiciously like a small freeze plug. My engine has a freeze plug similar to that but there is one located at the very back of the head and it is slowly leaking on my engine.

Theory: if that is a freeze plug on your engine blocking engine oil, it is leaking slowly onto the exhaust manifold. Since the exhaust manifold gasket isn't sealing perfectly, it is giving the illusion that the oil leak is coming from the exhaust port because of a very small exhaust leak which is causing small bubbles into the leaking oil you are seeing.

If my theory is correct, the solution is obvious by replacing the freeze plug but that is alot of work just to remove the exhaust system to do that. A short cut would be to apply JB Weld to that area; I see no reason you would ever have to need a freeze plug for oil in that area anyway.

Other than my theory, I can't think of what else it could be because you have already had the new head checked for cracks and there should be none. My .02 cents.

Herb
'82 240D
'87 300SDL