3406E Rear "Structure" Oil Leak

He may be right. You can certainly have oil leaks from inbetween the rear bell-housing and the engine block. What he is calling the rear structure, I would just call it the bell housing to block.

 

Yep, when a Cat's structure really starts to let go, front or rear both are bad, it'll leak pretty good. Unless you can pull the transmission and what not yourself, it's bend over time!

I had to have the front and rear structures done on my 96 Pete with an E model Cat in the last year and half.

Knowing now what I know, If I had a truck without any documentation on the last time those buggers were done, if I had the transmission out for anything I would go ahead and have them do both the rear structure and rear main seal. The front is kinda a PITA in it'sself, as it sets behind all the front timing gear. No real sense in having it done along with anything else because there's nothing aside from the radiators, ATA, AC, etc so you won't save on the R&R labor like you would on the rear side.

Also, when your front starts to go, don't listen to the guy that tells you 'just tighten the bolts up a bit'. That front timing case is like 1300 or so IIRC. I learned that one the hard way.

Luckily, when Cat changed to the C-15 series motors they changed from the cork gasket to a metal gasket with a rubber impregnated 'o-ring' type of gasket, these seem to hold up much better.

 

It's called the flywheel housing.
And yes they all leak over time.
There is a thin paper gasket on the E models.
That's why cat went to a O-rings to seal the structures on the 6nz and up.

Still better then detroit , they don't use either. Just some goop. They always leak after 400,000 miles

 

Another bad point other than down time is he probably want's to be paid twice. Most everything except Macks and Volvos can be ran and tested before the transmission is installed. I would argue the point even if you self diagnosed it he should have checked it before disassembly and trans installation. Maybe + 20%.
I would not reinstall a self adjusting clutch and guarantee it to leave the shop.
Engines are normally higher in the front and you probably have another leak.

 

Make sure the tech cuts you a deal. He should have picked off that leak on housing when he pulled trans back. It's a common issue, especially since the flywheel was out, that housing is fully exposed. I do agree with him on the self adjusting clutches, the life span on them are significantly shorter then manual adjust. See if he will work with you on labor costs. All the bolts should come right out since he already had them out.
Sorry for the bad news man hope you get it squared away. On the plus side it's a good motor you have so I feel it's worth dumping money into.

 

The front and rear structures on CAT engines have a habit of fretting then leaking after many miles. I just did mine last year on my 3408. It's a big job. The aluminum flywheel housing has to be machined because for sure if it's been fretting it will be out of true. If the flywheel housing is fretting probably the front housing isn't far behind. The new gasket is a multi-layer metal gasket and I used Loctite 515 to seal it.
The oil leak on mine was very hard to find and I ended up using this oil dye to find it.