Oil level on my peugot 206 lx is listed too high on the indicator on the dash and confirmed by checking dipstick.
What will actually happen if I continue to run it without draining off the excess? People have told me not to worry - will it really damage the engine or should I fix asap?
Depends by how much it has been overfilled. If its only slight, effects will be minor, the increase in friction will lower your economy and that's all. If it's grossly overfull, you risk damage to oil seals, and possible forcing of oil through the crankcase ventilation system into the cylinders.
A mate of mine at universty (who did not know a lot about cars) once decided to check the oil in his escort - unfortunately he hadn't heard of dipsticks or similar, so kept filling until he could see the oil level under the filler cap (about 15 litres went in, all told.) He then couldn't start it, which was probably fortunate in the circumstances.
If it's high enough to bring on a warning light then do something about it.
*IF* it causes any damage, it's likely to make the crankshaft front or rear seal leak (with the knock on effects they can cause such as slipping clutch or timing belt damage).
I'm told you can buy some type of pump/syphon device which goes down the dipstick tube and draws oil out that way - much easier than trying to drain a small amount out via the sump plug!
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