I am fighting a small war with oil leaks from my 1988 740 turbo. I recently changed the valve cover gasket and did not use any sealant. I plan to remove and replace it this weekend, this time with a sealant. I also have a leak from the pipe that runs from the turbo to the hole near the bottom of the block on the passenger side. I don't want to remove the manifold and turbo in order to refit this one, so I plan on using sealant (lots of sealant) there too.

Does anyone have any recommendations on the type(s) and brand(s) of sealant to use for these tasks?

I use blue RTV silicone sealant with great results. I can't say that it will cure the leak from your turbo oil return line, but it'll fix the valve cover gasket. I apply it in a thin uniform layer to the gasket on both sides. Clean and dry the mating surfaces well and you should have no trouble.
The oil return line may be leaking from the o-rings, and it may have to come out. Not a nice job. Use lots of Brakleen to dry it off before applying RTV.
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Rob Bareiss, New London CT ::: '87 244DL/M47- 221K, 88 744GLE- 202K, 91 244 181K, 88 244GL 145K

I have successfully stopped the leak from the oil return line on my 91 745t. I used lacquer thinner to clean all the oil from the surfaces of the block and tube (including the seam/cavity at their joining point). I used a silicone sealant and built up a heavy layer of the sealant which bonded well with the clean and dry surfaces. After two years it remains leak free.

Randy