So does this mean the compressor side can have a seal, since it's not 1600 degrees?  Would you almost always lose the oil out the exhaust, and not into the intake?  If you lost it into the intake, it could affect the way the engine runs, but if it goes into the exhaust side, it will just blow out the pipe. 

Rusty,

 Not claiming to be an expert here, but as I understand it many of the water cooled turbos have seals on the intake. The problem again is the surface speed of the seal and the dilution of the lubrication if the turbo is "suck through" or put another way injection or carb upstream. On many difficult systems a labarynth seal is used. The labariinth seal is just close fitting ribs nearly in contact with the shaft. this works fairly well on the pressure side. The oil drain of the trubo needs to be low restriction for another reason as well. The oil leaving the turbo bearing (50,000+ RPM) is often wipped into a froth which can be very hard to move through a line. Think of it as trying to push wipped cream through the tube. The air spaces make it hard to push.  Look at the TSIO-550 Continential turbos if you get a chance. They have a expansion and settling resevoir in line. It looks like a oblong box in line under the turbo.

Best of luck with the project.

Bill Jepson