I just got my '98 V70AWD (36,400 miles) back from the dealer. I had noted a leak from the rear of the engine that looked like it was from the turbo and from the rear 'bevel gear' seal, the seal for the prop shaft that goes to the rear of the car. The dealer replaced the "prop shaft" seal, and the turbo was nothing more than the very common turbo drip that all of these cars have. Tightening the intake hose looks like it did the trick.

There is still fresh oil that can be seen hanging off of a lower bolt that connects the front diff to the transmission? lying immediately to the left of it. It looks like the transmission connects to the front diff and then the right hand drive shaft and prop shaft come off of that. I suspect that there is a seal between the tranny and the front diff that is leaking oil and coating the driver's side of the front diff. The new rear seal is no longer leaking.

Someone said here a few weeks back that this could be a sign of a 'blown diff'. I can't find the message anymore (not yet archived). Could anyone with more insight into this please help? When I went to the dealer, the mechanic tried to tell me that the front diff was lubed by the tranny, until I let him smell the hypoid that was dripping out. He also had never put gear oil into an AWD unit, or even checked the level in one as far as I could tell.

Strange thing...This current leak doesn't smell like hypoid that much. Could it be engine oil? It's not ATF.