You say that the oil light came on, but was the Oil level actually low?

If not, than in could very well be a defective, or oversensitive oil level sensor. If it was indeed low, than obviously the problem is elsewhere.

I am just pointing this out, cause on my car I had an overly sensitive oil level sensor, and as soon as I was even 1mm below the full mark the oil level light would start flickering on.

Changing the sensor, made no difference. so I always had to keep it at the full mark. It never burned, or leaked any oil though.

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'95 E300 Diesel, 264,000 Miles. [Sold it]