Nice you located the problem and it wasn't too deep.


I work at a tractor shop (yep, like farm tractor) and a turbo'd tractor came in, smoking like I'd never seen a motor smoke before. It's turbo died, and the oil was going right through it. It did run away on the customer, but was cold when I seen it running so the oil wasn't hot enough to ignite like fuel, just smoke an incredible amount. There is about a quarter inch play in the turbo shaft through it's bore, and the mechanic working on it told me all the intake side fins are gone from the turbo impeller....looks like they have to tear the head off for a look, though it runs fine w/o the turbo and doesn't smoke now. That metal could only go one place. I'd be surprised if some portion of it didn't embed itself in one of the pistons.
Good thing for warranty. Not common to loose a turbo.