My 945 has developed an oil leak that has grown progressively worse over the past few weeks. The local mechanic thinks it's probably due to a head gasket failure. He bases this diagnostic on the fact that the oil seems to be coming from near the top of the rear of the engine. Possibly due to either a valve cover gasket, distributer O-ring, or head gasket. Also, he found a trace of antifreeze that appears to be originating where the head meets the block near the front of the engine, just under the exhaust manifold.

The car has 268K miles. Otherwise, it runs well.

The FAQ suggests that a head gasket will fail over time and with high miles due to the different expansion coefficients of the block and head. So is this a reasonable diagnosis? Should I just pull the head and replace the gasket, along with the valve cover gasket and distributor O-ring? Or maybe consider replacing the engine with something with fewer miles?

By the way, he estimates somewhere in the neighborhood of $1200 for a replacement head gasket job. It looks like I can purchase a head gasket set from Scan Tech for around $35 and a timing belt for less than $20. What am I missing here?

Any thought, advice, and opinions welcome.

Robert