Why did my air filter fill up with engine oil?

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Have solved the problem. You were correct about the PCV valve. Cleaned it out thoroughly and the problem went away. Thanks all for your help and ideas!
Bout dang time. I almost needed therapy you took so durn long. LOL
 
To elaborate on crankcase gases and blowby, my 1985 CA M-B diesel routes gases from top of valve cover directly into the turbo inlet duct. No PCV since a diesel has no intake vacuum (no throttle plate, just slight drop across air filter). That gunks up the turbo's compressor wheel, so I modified it to add a tee to drain oil into the sump (after change to 1982 engine which has a stub for that). Their earlier engines (and 1985 federal) have an oil-separator built into the air filter, which similarly drains it to the sump. Tuners with gas turbo engines often add an oil-separator on the PCV run to a catch-can which they periodically dump.

If you have excessive blow-by (bad rings and/or scored cylinders), it can overwhelm the PCV flow. The excess gas then flows into the air filter housing (after the air filter). That can get oil into the housing and thru the intake into the engine to cause blue smoke. I first saw this ~1975 in a Chevy Vega where the air filter was flooded with oil. Those engines were notorious for failing piston rings. To judge blowby in your engine, block off the PCV and view the gases coming out of the valve cover oil fill hole. At least in diesel engines with excessive blowby, the cap will barely stay on and even see strong puffing of gases from the hole. If the cap stays on and just dances slightly from escaping crankcase gases, it is fairly normal for a diesel (more blowby at 20:1 compression). Many youtubes.
 
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