This is a common problem on 5th Gen Preludes. There are ways to fix this, and the problem does have to do with the collars see the link below it'll tell you what to do, I couldn't access yours for some reason...

try this:
http://honda-tech.com/zerothread?id=1021823

Oh and in regards to the oil question, 5th gens are known to drink a lot of oil. Make sure you constantly monitor the oil level...