Yep, you have "The Lagmaster" for a turbo.

There should be NO oil inside the intercooler, period.
If you're running a K&N filter, pitch it in the trash where it belongs.
Don't forget to pressure test the intercooler, been a good number of those failing lately due to age and corrosion.
Test for leaks at the intake plate, where it bolts to the head, as well.
If the intercooler is junk, invest in a '99-'02 Power Stroke Intercooler, along with either an WH1C or an HX35W.
Mark.