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Has anyone checked the sending unit for the oil pressure indicator light or gauge? This could be bad causing the oil pressure light to come on. I think what the dealership is planning on doing is completely rebuilding or replacing the motor. Low oil pressure is usually due to mechanical wear and lack of maintenance over a long period of time. I would definitely suggest having them check the oil pressure sending unit before they get into any costly repairs. I hope this helps. Please let me know if you have any other questions. Thanks.
The number one cause of sludge is lack of maintenance but if you have the maintenance sheets you could be looking at another problem. Sludge is a mixture of oil, moisture, and contaminants from combustion. If allowed to accumulate sludge can clog the oil screen and oil lines. When an engine gets warm enough the PCV system removes water vapors. If your vehicle is equipped, then there could be an issue with this system. Sludge is also caused by short trips or a lower quality oil. If the engine is running fine with no mechanical noises then most likely it is the sending unit for the gauge or light. If you would run a vehicle with no oil pressure it would lead to extreme mechanical failure. If you don't mind me asking, what did the dealer quote you on fixing that was going to cost thousands? Thanks.