Welcome aboard noneed4nos.
It means that the oil seal on the inside of the cartridge is bad, and is letting oil leak past. Allowing oil to get into the motor, or blowing into the exhaust and burning. Eitherway, the turbo will need to be either rebuilt by a reputable turbo rebuilder, or replaced. First thing I would do before purchasing the car, would be to take the inlet hose or MAF pipe off and look into the inlet of the turbo with a flashlight. If the compressor wheel shows signs of severe damage, sand blasted look, or multiple pieces of the wheel missing, then you will have alot more maintenance issues with the car in the future. Those missing compressor wheel particles had to go somewhere, and chances are, they wound up either getting blown into and through your intercooler and made their way into the motor. This would lead to premature bearing and or cam failures if not caught in time. Not trying to scare you away from the car, just trying to make you aware of some potential issues.
Now, if you take the hose off and inspect the compressor wheel and see no damage to the wheel, or signs of the wheel rubbing on the housing, the next thing I would do, would be to physically grab the shaft and move it around. Obviously doing this when the car is cold, as we don't want you to melt your fingers off. It is normal to have some up and down movement with the shaft, but not enough that would allow the wheel to contact the housing. You should have no in and out play on a new turbo, but if your seal is bad, you might have a little bit of in and out play due to worn seals and thrust bearing. It might just need to have the seal replaced. But honestly, if it was me, I would have it completely gone through for peace of mind. Start from scratch. Also, now would be the time to run the Precision Turbo Oil Saver kit. This kit provides filtered oil to the turbo under normal operating conditions. The factory oil system, feeds the turbo with dirty oil from the motor.
Lastly, depending on the mileage of the motor, if it has high mileage, or if the motor was replaced and or overhauled and the factory oil cooler is still hooked up, I would immediately disconnect the oil cooler and either run an external replacement, or completely do away with it. The factory oil cooler can not be completely flushed out, and if any metal particles were/are trapped inside of it, those particles will eventually leach their way back into your oil system and cause future damage. Let us know more about the car and it's location, you never know, someone on here might know all of it's history and be able to tell you alot more about the car.
Hope some of this helps.
Patrick
