As I changed my oil (Mobil 1) today on my '98 V70 AWD, 36K miles, I noted that there was a dampness visible on the rear of the engine, coming from above the square shaped part of the engine that lies directly behind the oil drain plug. Looking up with a light, it appears that there is a large turbo hose or something that is damp as well as surrounding objects. I've been smelling hot oil after pulling into the garage lately and never could see anything from above. Could this leak be blowing back onto the exhaust? No actual oil is dripping from under the car.

This isn't the usual intercooler oil blowby problem. This is in a different location. I seem to remember that there is something to be tightened that can stop this, in fact, I think it may have been tightened way back when when the car was pretty new and had its first "intercooler blowby leak". Before I go to the dealer, perhaps someone can give me a clue as to where this leak is coming from?

Duhh! Typo logging---off. This should be listed as a V70, not C70.

this sounds a lot like the very common "turbo oil-return line leak"...happened to my 94 850 Turbo at 50K or so...a 100 dollar or so repair...

Thanks. My research suggest that too. I'm still under the original warranty. Perhaps this is one more reason to buy an extended warranty when the time comes.