My 1991 Volvo 940 Turbo with 135,000 miles on it is blowing oil and smoke out of the back of the Mitsubishi turbo where it attaches to the exhaust system (I detached the turbo from the exhaust system to confirm that this was the source of the smoke **clouds** coming out of my tailpipe). I want to do as much of the work on this as possible to save some money, but I’m not sure if I should buy and install a repair kit (Turbo City says I can re-balance my turbo by simply scribing a mark on both wheels before disassembly, then matching them up on reassembly—does that sound right?), buy and install a remanufactured or new cartridge, buy and install a remanufactured or new turbo, have someone else rebuild my existing turbo, etc. Any suggestions out there on how I should proceed? Also, any recommendations on who I should or shouldn't do business with?

By the way, I’d like to make sure I haven’t overlooked something else that might be causing this problem. Here's what I have done so far: (1) I cleaned the crankcase ventilation system. The nipple on the intake manifold, the tube between that nipple and the nipple on the Y-fitting, and the orifice in the oil trap were all clogged. I cleaned them and now the oil fill cap has suction on it when the engine is running; it bounced before I did the clean-up. (2) I checked the air cleaner and the hoses between the air cleaner, turbo and intercooler. They all seemed to be in good shape, and none of them were clogged. The hose between the turbo and the intercooler had a little bit of oil in it, but I understand this is normal. The intercooler itself had virtually no oil in it. (3) I removed the hose from the front of the turbo and inspected the blades. They were clean, not bent, and showed no signs of rubbing along the sides of the turbo housing. They spun freely and had very little play in them. (4) I removed the exhaust pipe from the rear of the turbo and inspected the blades. They were not bent and showed no signs of rubbing along the sides of the turbo housing. They appeared to spin freely and seemed to have very little play in them. However, they were definitely not as clean as the blades in the front of the turbo, and the whole rear half of the turbo housing was coated with oil residue and an abrasive or fine granular substance that I could not identify (if it was metal, it was non-magnetic). Did I miss anything that would help diagnosis the cause of my problem or help determine the best way to proceed?

Sorry for the long posting, but it’s make or break time for me on this project. Thanks.

Damon