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engine oil leaking from bell housing 120-130

The first thing to do would be to drop the aluminum lower bellhousing brace so you can get a better look. Clean the area, run the motor, watch carefully. Is the rear seal the rigid type or the original felt? If it's the orange type seal you may have lost the spring (I pack them with grease to keep the spring in place). The later Volvo seal (dark brown and thin) comes with a tool to keep the rubbing surface retracted--but that seal will bend easily if not pressed in with the proper installation tool. Felt seals can fail due to shrinkage and/or improper installation. -- Dave






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