The brief
The 316i had been needing oil topped up between scheduled services, which on its own is a sign of an oil leak somewhere, and the trail led to oil around the flywheel area at the back of the engine. He brought it in. On these the flywheel oil seal, the rear crankshaft seal, sits where the engine meets the gearbox and stops engine oil escaping from the back of the crank. When it hardens and fails, oil weeps out there, which is the residue around the flywheel and the dropping level, and because it's tucked between the engine and the gearbox there's nowhere for it to go but down the bellhousing. Left long enough, it can contaminate the clutch and the level keeps dropping, so it needs proper attention rather than topping up.
The diagnosis
On the lift the leak traced cleanly to the flywheel oil seal, weeping at the back of the engine, with the sump gasket and the other seals around it dry. Confirming the source matters here, because getting at that seal is a job, and you only want to do it once. That's a seal replacement, and on this car it means dropping the gearbox to reach the flywheel and the seal behind it, then a fresh genuine BMW-spec seal in.
The work
The gearbox was supported and dropped, the flywheel came off, and the old rear crankshaft seal removed. The seal seat was cleaned up, a new genuine BMW-spec seal fitted carefully so it sat square, the flywheel reinstalled and torqued to spec, and the gearbox bolted back up. The oil that had tracked down was cleaned off and the engine topped to the correct level. A road test followed to confirm it stayed dry and the level held.
The outcome
Dry flywheel area, no oil around the bellhousing, the oil level holding, and no need for top-ups. The 316i went home with the leak closed off. A flywheel oil seal leak only gets worse, and it's tucked in a place that gets expensive to reach, so doing it properly with the gearbox out, once, sorted it for good.
