Joel,
The engine driven compressor is not unlike a car engine in that it has a piston going up and down to compress air and it’s internals are lubricated with engine oil.
As the comprerssor builds hours on it the rings begin to wear and allow oil to pass. As long as the dryer element doesn’t get its dessicant coated with oil quickly the passing of oil is tolerable. It is when so much oil passes the rings that the dryer dessicant gets coated so it no longer functions to dry the air before it gets serviced that you begin to have problems.
As Tom points out a bit of oil in the wet tank can be considered routine. You have a problem if you see oil covering the coach frame around the dryer purge valve outlet. That means the dryer element is so coated with oil that it is now being exhausted from the dryer. That could be because the element is long overdue for replacement, or if replaced regularly, it means the compressor is passing so much oil the dryer element can no longer work effectively.
I use a 2 year dryer element replacement (usually never more than 30,000 miles) interval and even though the 2 previous coaches had about 250,000 miles on them I never saw oil around the purge valve, and I would get maybe a tablespoon of oil from the wet tank along with some water. I got no moisture beyond a slight momentary mist on tanks downstream.