e320 oil question

[snglbrd]

A friend of mine bought a used 1999 325 sedan with 57000 miles on it and paid the extra $1500 or so the warranty. After driving it about 5000 miles it began to burn about a quart of oil every other tank full of gas. Took it back to the dealer and they did an "oil consumption test" and proclaimed the problem solved. After driving it about another 3500 miles the dash lit up saying I was on the lowest safe level of oil. Went to the gas station and put in 2 1/2 qts of oil and found a light brown hand cream like substance on the oil cap. Does anyone know of this model having a problem with the head gasket? Mercedes won't recongnize it as a problem and says it is supposed to burn 1quart every 2nd fill up.......