I was driving home last night and I smelled oil. It was heavy traffic so I looked around to see who was smoking. Wasn't me....... A minute later I have steam coming from under the hood. I checked the temp and it was steady in the middle where it should be. The motor runs smooth. I pull up and popped the hood. There is a geyser coming from the overflow tank which stopped shortly after I shut the motor down. Oh #$&@? There is oil in the water!

So what I know is:
It didn't overheat.
It runs as smooth as ever.
There is oil in the water.
There is no water in the oil

My guess is a spent head gasket at 150k miles.

Any other ideas? My bro suggested I might have a heat exchange oil cooler in the radiator. It doesn't look like it.

 

Headgasket is probable.

The heat exchange oil cooler is on the side of the oil pan. I suppose it could have damaged plates and allowing the mix. The two hoses you see coming off of it are coolant, the oil feed is directly on the backside into the pan.

 

Thanks for the input Teekay
I started the tear down and found another issue. I have a hairline crack in my turbo case. This is my first turbo so I don't have any experience here. The crack is in the transition from the header flange to the impeller housing. It's about 3/8" long and I never would have seen it if it wasn't starting to turn white immediately near the crack edges. Is this thing doomed? Can it be welded?

 

Have a pic? My 12T had a crack -> Imgur: The most awesome images on the Internet when we replaced it with a 14T.

 

I'll try to post one tonight

 

Here it is. What say ye?

 

I'd say that's not good :/

 

Bah, I'd just leave it. It might just be a knick. Are you sure it goes all the way through?

 

I will be extracting it tomorrow for inspection. BTW any suggestions on the best way to flush all the mud from the coolant passageways?

 

Update
Removed turbo today. I don't know about the rest of you but I say that job is no joke! There must be some short cuts I don't know about. I found the source of the crack. The splitter on the exhaust intake side has cracks on both sides near the wall root. I guess that means I should replace it.
Question, how freely should the impeller spin?
Next question, anyone heard of oil and water mixing in the bearing block of the turbo?

 

I'd flush the coolant, drive it and check it again.
Wouldn't be surprised if some numb-nuts service guy put brake fluid in the coolant overflow.

 

Well the car is all patched up and running better then before. It runs so smooth now I end up at 80 frequently without knowing it. I'm not absolutely sure what the leak was. I have been working on bmw's for the last 30 years. So I did the oil cooler and the head gasket. Biggest pain in the **** was flushing the oil out of the coolent jacket.

Next I'm looking ta the t14 swap.....

 

Oh ya
On top of it running so nicely. The car was throwing codes for the cat (element is actually loose and rattling in the pipe) and the coolent being under temperature. They are all staying cleared so far.