It's not a "drain hole". It is, in volvospeak, a "calibrated orifice" (ie,

it's just like Yannass, but it's calibrated). It showed up after 1994,

along with alternate intercooler plumbing routing. Some dealers even used

a drill to add a "calibrated orifice". All, supposedly, to prevent part-

throttle icing in certain weather conditions. (Mazda came out with a

2-stage thermostat as their solution to this potential problem, which

happens when the throttle is at a fixed position for a long period of time,

which can eventually allow enough ice to build up such that when one's

foot is removed from the loud pedal the throttle remains open, which would

be enough to panic some drivers...)

If you're not worried about your throttle freezing in a contant open

position, you can just plug the orifice. You'll still probably notice some

oil by the hose clamp at the lower intercooler hose.

The bottom line is that turbos have some oil in the intake system, and

the bottom of the intercooler is the lowest point in the intake system,

so that's whree you'll find most of it. The entire intake system does

eventually build up a slight oil film inside ducts/hoses; if it's synthetic

it'll stay liquid and not turn into a layer of crud over time...

Some of the mechanics at the local dealer like to take down the platic

baffle under the intercooler and wipe it dry of oil at each oil change, to

prevent any drips on the customer's garage floor between oil chagnes.

All part of normal life with a turbo...

- Dave; '95 854T, 101K mi