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Sounds like just the head gasket. What you will probably find, is a corrosion "track" leading from a coolant passegeway to the oil return gallery, in the head gasket area. If the P.O. didn't change coolant regularly, it corrodes the block and the head, and that creates a leak path past the head gasket.
Hopefully, the corrosion is on the head surface, and not the block surface. The surface that is corroded needs to be machined flat again, otherwise the new gasket won't seal. It's A LOT easier to machine the head than the block. Unfortunately, Porsche heads have very little machining allowance, usually, one cut and that's it. The service manual should give you a place to measure for machining allowance. Print out that page of the manual and give it to your shop, along with the head. It should only be in the range of $50-$75 to have the head "surfaced"
If you have the oil cooler seals, you might as well do them while you're in there, it's alot easier to change them with the head removed.
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Mike
'92 968
'01 VW Jetta TDi
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