Think I've found the oil leak-- 1986 350 SBC
 

Well, when I was poking around under the hood fixing my vacuum leak and smoothing out my idle last weekend,
I took a look at the oil pressure sending unit on the back of the block. The area surrounding it was a bit
wet with oil gunk. I'm not sure how to tighten this up since there's really no room to rotate it clockwise
without the oil sender(s) hitting the intake manifold. There's a short section of pipe/tube, a tee fitting,
and the 2 sending units. See the photos below for a visual.

Any ideas? This is the way it came from the factory. It's never been apart since it was built in 1986...

http://www.boo.net/~kpshortell/Chevy/86OilPressure1.JPG
http://www.boo.net/~kpshortell/Chevy/86OilPressure2.JPG
http://www.boo.net/~kpshortell/Chevy/86-350.JPG

The sending unit is basically in two pieces. The first is the 45 degree elbow and the second is the cylinder like canister in which the wire hooks up to.

You will want to unthread the ton canister from the elbow and in turn it will give you the clearance to tighten up the elbow. I would actually take it out and put some thread tape or goop on the elbow.

This is the way my sending unit is on my 82' 350. I don't know if it is similar on your 86'

Something I just thought of is that it could be the back of your intake maifild leaking. Those gaskets between the mainfold and the block love to leak after time due to so much expanding and contracting.