The brief
Charles brought his 320i in with an engine low oil warning, and a film building up on the underside of the engine. He brought it in. An oil leak only spreads, the loss adds up, and a low engine risks low oil pressure and damage, so a low-oil warning isn't something to leave. On these the oil filter housing gasket is a common source. The oil filter sits in a housing bolted to the side of the engine, and it seals to the block with a gasket. That gasket heat-cycles for years until it hardens and shrinks, and once it does oil seeps out the join, runs down the block, and drips, sometimes onto the exhaust where it burns and smells. A hardened housing gasket doesn't reseal itself, and the leak only gets worse, so the housing has to come off and go back on with a fresh gasket.
The diagnosis
With the engine cleaned off and run, the leak traced to the oil filter housing gasket, oil weeping from the seam where the housing meets the block, running down from there. The valve cover, the sump and the rest of the engine's seals checked out dry, so it was the housing gasket. That's a reseal: pull the oil filter housing, clean both mating faces, and refit it with a new genuine BMW-spec gasket, every bolt torqued to spec.
The work
The bits in the way came off, the oil filter housing was removed, both mating faces cleaned back so the new gasket had a clean surface to seal against, and the housing refitted with a fresh genuine BMW-spec gasket, every bolt torqued in sequence. Fresh oil and a new filter to finish, the level topped, and the engine run and checked warm for any weep. A road test confirmed the housing was dry, the level held, and the low-oil warning stayed off.
The outcome
No more oil under the engine, the oil filter housing sealed and dry, the level holding between checks, and the low-oil warning gone. The 320i went home with the leak sorted at its source. A hardened housing gasket only worsens and quietly drinks oil, so pulling the housing and resealing it properly stopped the leak and kept the engine where it should be on oil.
