Brian certainly had experience with his fog machine before replacing the turbo.
You can check the bearings for end and side-to-side play perhaps that will be easy proof the bearings are allowing oil to get sucked into the intake.
The thing will not get out of its own way with the crossover pipe off or sans-turbo (= forget about driving it with no turbo!).
You may want to do a leakdown test also but I would put a bet that you have a cracked head with the exception that usually causes a loss of coolant.

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'95 E320 Wagon my favorite road car. '99 E300D wolf in sheeps body, '87 300D Sportline suspension, '79 300TD w/ 617.952 engine at 367,750 and counting!