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This is a common place for oil leaks, this article shows how to replace the o-ring. The only real trick is to rotate the cooler as you pull it out due to clearance.

http://www.myturbodiesel.com/1000q_how_to/a3b4/oilcooler.htm

Other common places for leaks: valve cover, egr weep hole, engine block breather hoses, oil pressure sender. My oil pressure sender was actually leaking out of the middle of the sender. All fixed now.
 

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Discussion Starter #3
Always clean the area first and then confirm where the leak is coming from. Oil tends to get blown around and can move up, down, sideways, etc.
 

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You can block off the lower engine block breather hose with a block off plate without causing too much blowby. From what I've read, it is a left over from earlier VW engines.
 
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