If it still turns it can't hurt anything to try to start it again, the worst that can happen is you will have to replace the engine, which sounds likely anyway.

The car starts and oil pressure is pegged at max. It won't hold idle and is pretty rough at 1100 rpm. I didn't push it any farther than that. It took 1 gallon of oil to bring the dipstick to 1/2 quart low. I'm guessing that one or more cylinders have lost compression. I have a compression gauge that reads up to 300 psi, but I need an adapter, does anyone know where I can get one?

I also snagged a spare engine "just in case". Driving these old machines one just never knows. Having a spare, if the primary one tosses a chain or whatever, I can be running again in two days (or one very long day) if needed. Already used the spare tranny when the first one decided to go, so I'll be looking for another good one of those to keep around. (anyone need a 722.4 core? :) )

Harbor Freight's diesel compression tester is pretty cheap.

My neighbor just offered to sell me the 617 out of his W116 300SD. The engine was originally in a W123 and he had to shave away some of the oil pan to get it to fit. His car is currently running well, so I can test drive it. As long as the oil filter housing on my car is still good, I'll probably do the swap.

Did you figure out where the oil went? I wouldn't be in a big hurry to condemn your engine without further analysis. Is oil still squirting out of it when it is running?

We didn't see any oil squirting out while it was running, but I didn't rev the engine either. The fact that it was running like sh!@# makes me think that it's toast. I'll give it another look.

You've got a mystery on your hands. You're not the only one to have a bunch of oil blow out at speed. I seem to remember at least one case of it coming out the dipstick tube as a result of the PCV hose getting crimped.

I just started it up again and now it holds idle and is running much better than before. I was able to rev the engine at the linkage and still can't see any oil squirting.

If the leak was coming from one of the oil cooler lines, it wouldn't show any squirting until it got up to temperature and the thermostatic valve opened.

If its running ok, I might be tempted to take the hood off and drive it around the block until it got up to temp. You would know immediately when the oil started squirting and have time to shut it down, cool off and still get home without a tow.

I drove it around the block a couple of times and it runs okay, but it's not what it used to be. I cleaned around the oil pressure sender, filter housing gasket oil cooler fittings and the turbo tube, and it all looks fine. I'll drive it around longer next time to get the temp to open up the filter housing thermostat.

Good Luck. Hoping for the best.

Just a possibilities.
 

If you do not find any leak then I suspect it is blow by that blew oil everywhere. It could be from dip stick hole. It happened to my 300SDL. It popped the dip stick and blew oil everywhere. Do a compression test.

I think that you're on to something because I did notice the dipstick was protruding from the tube when I first popped the hood and I was stunned to see that the injector pump was doused with more oil than any other part of the engine. I hadn't checked blow by in a long time, but when I changed the air filter a few weeks ago it wasn't that oily, but then again my intake manifold leak was really starting to pick up.

We need a low oil level warning system real bad. It would have saved his engine.

This is the second such incident recently. The other one was Rollguy's neighbor. Are there more that you know of?