I just purchased an '81 240D not too long ago, and just recently noticed that there is some leakage of oil on the TOP of the engine, where the hose comes in from the air filter. So I opened up the air filter and, sure enough, there is some oil in there too! I'm hoping that this doesn't mean that I have a blow-by problem and need to rebuild/replace my engine. Are there other options as to what I could be looking at?

Yeah, thats blow by all right. Blowby is not that big an issue, it is just an indication of wear and is normal. These engines will run fine and give good power and fuel economy with quite a bit of blowby.

Tom W

__________________
[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.

If the engine runs well and starts easily, don't worry one bit about how much blow by it has.