My 97 850 GLT has 148,000 miles. Today my mechanic noticed some oil leaking around the turbo. Not real heavy. Said it could go next week, or could last another year or two, and that I'll know when it's gone bad by a large amount of oil puddling under the car. Said it would cost approx. $1,500 to fix. Does all of this make sense?

The symptoms you describe don't mean anything. The oil return line seal is a likely culprit (the replacement part is about 68c). And oil in the pressure tube and intercooler is normal, especially after 148k miles. It would be worth doing the seal as you (or your mechanic) can look for signs of coking. Also, make sure you're doing regular oil changes.

When your turbo is going, the number one sign is oily smoke from pull-away starts (stop signs, red lights, etc) which then seems to clear up. The cause would be a leaky oil seal at the exhaust side of the turbo, allowing pressurized oil to mist into the hot exhaust pipe. And even then, your turbo will continue to function.

$1500 would be expensive. My indy tech gets less than half that. (He also says he hasn't yet seen an 850/70 turbo fail.) He uses two programs. The first is he keeps the car for three days (he provides a loaner) and has the turbo rebuilt. The second program is he replaces just the center cartridge.

If you've got the nerve, do it yourself. I once rebuilt my 745T's turbo and it cost me $98 in parts, $50 for spin balancing (at 100,000 rpm), and an afternoon.

But I digress. If you don't have smoke out the tailpipe, your turbo is OK.
--
(98 S70 T5SE misc mods, mostly lighting) (92 940GLE)

A very common source of oil leak is the oil return line. The
gasket can leak. It costs a buck. See:

http://volvospeed.com/Repair/turborepairline.htm

Of course, it is hard or impossible to trouble-shoot over the net without
actually seeing the car so I think you should get another mechanic to
look at it.

Oil leaks under the car can come from many things so don't replace a turbo
becuase of an oil leak -- trouble-shoot it to the source.

I think you are being ripped off. I have an oil leak on my 95 T5 which is due to a rear main seal and the oil return line from the turbo. This seems to be a common problem. The new seal for the return line will be cheap to buy.

I will be getting it all done at once along with all new fluids, brakes/coolant etc. Total £350.

As mentioned below, it's VERY normal. Not only that but it always amazes me when I read that there are people out there who say things like "it could go next week" when discussing oil dripping from its exterior. If only you knew how simple that device is, you'ld know that external oil seapage is hardly a sign of "turbo failure" which ONLY happens IF the bearings fail, very rare on newer water cooled turbos on a well maintained engine, even at 148K miles.
Although rebuildable in the event that a bearing did fail or a front or rear turbine shaft oil seal failed internally (never externally), most people would replace them then rather than rebuild.

Read this...
http://www.brickboard.com/AWD/index.htm?id=461668
I posted it about 3 days ago.... It should relax your muscles a bit.

It is completely normal.

Also, look in Volvospeed.com message boards and search "turbo leak*"... If it's not on the driveway, it's normal.

Hope it helps!!!
--
Costas Kotinopoulos 1997 850 GLT TURBO

Also, when the turbo does go (and it may never) just have the mechanic take it iff, give it to you, and send it in for rebuild. Like $265 + on & off. They can stor the car for you...They are rebuilt here in Denver and in Texas....