1996 SL1 after engine overhaul oil is having to be added regularly. Rings replaced, valve seals replaced, valves ground and reseated and head pressure tested by machine shop, head gasket replaced, timing cover gasket remade, oil pan gasket remade, crank and connecting rod bearings replaced, intake and exhaust manifold gaskets replaced. Compression on all cylinders 120 psi or better, no smoke in exhaust, cleaned EGR valve and throttle body. Used upper and lower gasket sets to replace all gaskets. I am looking for suggestions on why and where the oil is going? Currently I don't think the oil is going into the antifreeze as the level is not going up in the resevoir. Thank you for any suggestions.

1. Top end is the replacement of cam, lifters, push rods, rocker arms, valves, valve springs, valve guides, valve oil seals, cylinder heads resurfaced, and checked for cracks. (Magna fluxed)
2. Bottom end is engine block resurfaced & checked for cracks, Cylinders honed, crank bearing resurfaced/re-rounded, crank rebalance, new crank bearings. New connecting rods, new rod bearings, new pistons, new piston rings, new freeze out plugs, new front & rear crank seals, new oil pump.

An engine does not make oil, but it can spill the oil that should be inside. You could have an oil leak, which means that oil will be leaking from either the front or the rear oil seal. The front oil seal is just behind the crank pulley, the one that drives the fan / alternator belt. If oil is leaking from there, suspect the front seal.
If you have oil leaking from the bell housing, that the the bell shaped metal thingy between the engine and the gearbox. you can suspect the rear oil seal.
If you inspect the engine and see oil leaking from the oil pan under the engine, you have a leaking pan gasket. This can usually be solved by tightening the pan bolts, a whole lot of bolts underneath the engine.
Finally, and this is probably the worst, if you see oil around the breather pipe that goes from the valve cover on top of the engine to the gas intake system, you have leaking compression, that means either the valve stem seals are leaking or the compression rings are finished, and you will have to have the engine overhauled, or at the very least have the cylinder head overhauled.
If the rings are suspect, you will also have excessive smoke out of the exhaust when you drive, especially when you accelerate. Check the exhaust for signs of wet oil.

you have a bad head gasket or a crack in the block or a bad valve seal

• it sounds like you might have bad gaskets or seals even if you have replaced them if they are bot installed just right you can have leaks such as you have described

Smokes blue on cold startup = leaking valve seals, which really don't affect drivability if it stops 1-2 seconds after startup. To fix you need new valve seals/heads rebuilt.

If it smokes while under load, then the rings are worn, letting oil seep past the rings into the compustion chamber.

Have you let this car run low on oil? Leaking valve seals usually present themselves if the car has been sitting a while, drying out the seals/cracking them. Worn rings should only present themselves after very very high milage, such as 300,000 miles or more. Somebody has not changed the oil on a regular basis, or just never changed the oil, or only changed the oil like every 20,000 miles.

To bring your engine back to normal, you will have to overhaul the engine and have the heads rebuilt as well.

Blue smoke is oil being burned in the cylinders. It could be valves not seating properly, valve stem seals bad, possibly a head gasket if it blew where an oil passage may let oil in cylinders, or badly worn piston rings.
If you can afford it, have a shop do a leak-down test of each cylinder to pinpoint the problem. Then you may know if you need a new head gasket, or a valve problem fixed when head is off, or new valve stem seals replaced, or if rings are bad requiring engine overhaul.

Clogged PCV Valve
The main purpose of the PCV (positive crankcase ventilation) valve is to recirculate blow-by gases back from the crankcase area through the engine to consume unburned hydrocarbons. Blow by is a mixture of air, gasoline and combustion gases forced past the rings on the combustion stroke. The PCV system usually has a tube leading from the crankcase to the carburetor or intake manifold. Vacuum within the engine intake manifold pulls blow by gases out of the crankcase into the combustion chamber along with the regular intake of air and fuel.
Worn Piston Ring Grooves
For piston rings to form a good seal, the sides of the ring grooves must be true and flat - not flared or shouldered - and the rings must have the correct side clearance in the grooves. Normally, automotive ring groove side clearance should not exceed .002-.004. As the pistons move up and down, the rings must seat on the sides of the grooves in very much the same way that valves must seat to prevent leakage. New rings in tapered or irregular grooves will not seal properly and, consequently, oil will pass around behind the rings into the combustion chamber. Worn grooves are usually flared or tapered causing increased side clearances which permit more than the normal amount of oil to pass the rings into the combustion chamber. Excessive side clearances also create a pounding effect by the rings on the sides of the piston grooves. This promotes piston groove wear and, if the condition is not corrected, breakage of rings lands may occur.
Cracked or Broken Ring Lands
Cracked or broken ring lands prevent the rings from seating completely on their sides and cause oil pumping by a process similar to that described in #7. In addition to this, they also lead to serious damage to the cylinders as well as complete destruction of the pistons and rings. Cracked or broken ring lands cannot be corrected by any means other than piston replacement and this should be done as soon as there is the slightest indication of a crack.
Worn Valve Stems and Guides
When wear has taken place on valve stems and valve guides, the vacuum in the intake manifold will draw oil and oil vapor between the intake valve stems and guides, into the intake manifold and then into the cylinder where it will be burned. If this condition is not corrected when new piston rings are installed, an engine is likely to use more oil than it did before because the new piston rings will increase the vacuum in the intake manifold. When gum or deposits on the valve stems are removed - a procedure recommended when overhauling an engine - the seal previously formed will be removed and leakage will be more pronounced. This is particularly true on overhead valve engines where loss of oil may occur on the exhaust valves as well as on the intake valves. High oil consumption caused by too much valve guide clearance can frequently be cured by reaming or nerraling the valve stem. In some cases new valves may also be required. Use of a permanently bonded valve stem seal will give added insurance against oil leakage on complete engine overhauls or on valve jobs. Large Oil Leaks Leaking valve cover gaskets, leaking crankshaft front and rear seals.

you have bad seals in the valves or bad piston rings.

Blue smoke is oil and if it's coming from your engine compartment most likely means the gasket on your valve cover either needs to be replaced or it could even be as simple and needing to tighten the valve cover bolts a bit. Oil is leaking from the valve covers and working it's way to your hot exhaust manifold and that is where the smoking is most likely coming from.

make sure the pcv vavlve has been changed if not try that