Please help with Oil Intercooler Leak
 

I apologize for the crosspost but I found the thread over in the S4 forum from a google search about a leaking intercooler and I initially posted there.

Last week I had a bad smell and excessive smoke coming from my exhaust on my 2001 A6 2.7T (about 95,000 miles on it with no modifications). Had it towed to the dealership and they said it's oil leaking into the intercoolers. My extended warranty will cover the turbos - woohoo that's over $3000!!! The bad news is they won't cover the oil lines/wastegate and installation of those which is nearly $1300!! The dealership recommends getting new lines and the warranty company says they won't cover it again if the turbos fail in the near future if I don't have them replaced now.

My question - could these lines be part of the problem? Does anyone think it would fail again if I just had the turbos replaced? I really can't afford to spend the $1300 on this - especially if this isn't necessary.

Again, any advice would be greatly appreciated! I'm considering getting only the new turbos installed without the lines and just selling the car.