After just having spent 2000 EUR on getting a new diff and u-joints installed, then putting max. 300km on the car, I just checked the oil level as part of my regular monthly checks. Turns out the level was DARN LOW, approx. 1.5cm below the "MIN" marking on the dipstick.

I went ahead to top the oil up with some 5w30 (engine slightly warm), and when doing that, I started seeing some smoke coming up from underneath. On a closer inspection, oil looks to be dripping out from the left camshaft cover, dripping down on the heat barrier then onto the hot exhaust manifold and starting to produce smoke.

I wonder what to do at this point. Would you drive a car, even to the dealer, at this oil level and condition? If it leaks by simply topping it up with approx. half a liter, I won't have much luck to get the oil level above minimum.

I haven't had any oil drips in the garage however, so I really wonder where the oil has gone? Perhaps it was all dripping out and burning up while driving. I might just have been lucky never to have had the cat burst into flames.

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I don't know how far it is to the dealer, but I doubt that will be a problem. The amount of oil escaping from the cam bearings is not excessive and the cam cover is on a raised lip formed by the cylinder head, so most of the oil will drain back to the sump. Try adding the oil very slowly and the drip should be much smaller.
RK__________________
97 XK8 85K mi

 

Have you checked the bolt torque specs. on the cam cover. It could be as simple as a bolt backing out and not sealing the cam cover properly against the gasket and head.
Additionally, the gasket may have rolled out of the cam cover grove, permitting the oil to escape.
Both items can be inspected and checked rather quickly.