For those of you that have ever had the oil seal go on you, can I confirm something? I got a turbo from a buddy of mine and he was spitting madd oil on the dyno and just from driving. I am now the owner of the that t3/t4 but when I took it apart, I didn't konw what to expect. There was crustified oil everywhere but the turbo seemed to be in good shape. I took it to a shop and they told me that the seal was shot.

Now I wasn't sure what exactly was wrong with it, but upon further inspection, I think I am getting the idea. I then had the center section overbored and an oversized ring installed but they told me that the ring gap was twice as large as it should be. Here are some pics, sorry the first one is a bit fuzzy, but my question is this, if they didn't overbore the hole that ring gap wouldn't be as big, and if it were a smaller gap, would that be a big enough hole in the turbo to let lots of oil out?

 

Poor oil drainage or high crankcase pressure is a likely cause.