Hello Relly -
Your diagnosis looks like what I suspected to be the problem. The oil presents itself along the edge of the valve cover, not in puddles just kind of moist. I am not familiar with Audi engines per se, (mostly have worked on American old-school V-8s) but the basics of internal combustion engines is pretty much the same what-ever is being worked on. I will be taking the car back to the dealership where my son purchased it to have their mechanic fix the problem.
Also I've heard that the timing belt cover can leak oil. Would that cause the oil to fall on the exhaust manifold and burn?
Lastly, could the turbocharger be another possible source of the problem? The vehicle has 154K miles on it. I've been told that the seals on these turbos will wear out eventually. Not sure what the life-expectancy of the turbo is, but my suspicions are that if an oil seal in the turbo breaks down, we would see oil-smoke coming out of the exhaust (which it is not right now). Am I on the right track here?
I'm in the U.S. Pacific time zone BTW.
Thanks for your help.
Jerry