When the turbo on my buddy's '06 failed and the turbine wheel departed the shaft, the oil was forced into the turbine housing past the shaft seal. You'd have thought he was being paid for mosquito abatement for the amount of smoke that was coming out of the truck. Being a stubborn old man, he drove it 14 miles to my place to drop it off for me to fix it for him. It only burned/pushed about 6 quarts of oil in the exhaust. It was a wonder he got it to me, it had no power.
It's possible you have two failures at once, a turbine shaft seal or VGT actuator seal putting oil in the exhaust, ad an injector at the same time. I'd pull the #3 injector for inspection, failed o-rings can allow HP oil into the fuel side of the injector. O-ring kits being cheap, I'd have one on hand for a quick test if the stock units are suspect on inspection. If the injector looks good but you deem the o-rings need replacement, reinstall the injector and run a physical compression test, #3 should be within 10% of the highest or lowest cylinder tested of the eight. If the injector appears to have any tip damage, you should still run a compression test with the stock injector, then replace the injector and run the engine and do a cylinder contribution test. If it passes all this, it's probably losing oil from the turbine.
Sent by my right thumb!
The Current Truck (Oct-2013 to Present):
1999 (Early) F-350 Lariat, CCLB, SRW, Black/Tan
7.3L Powerstroke, 4R100, 4x4, 3.73, 37x13.50-18s, '05 Axle Swap, 6" Fabtech lift, GTP38 "D66" turbo upgrade, SCT 4-position chip with custom tuning by me, Straight Piped 4" down pipe through 5" dual stacks, N-Fab full length triple steps, Pro-Tech cab guard and tool box, louvered 5th wheel gate, Hella 500 Fog and Driving lamps, much more to come...
The one I'll miss, (Mar-2009 to Jan-2014):
2000 Excursion XLT 4x4
6.8L V-10, 4R100, 4.30, 285/75-18, 271whp / 388wtq
The one I won't, (Jul-2005 to Sep-2012):
2005 F-350 XLT, CCLB, SRW, 4x4 FX4
6.0L PSD, ZF-6S650, 3.73, 35x12.5-18, 4.5" Lift