I let all the air out of a used Fox RP23 shock (which I haven't ridden yet) to remove it from a frame, and a small amount of oil sprayed out along with the air. Is this normal or is my shock in need of repair?
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This is normal. There's oil that lubricates the inside of the air chamber and a little will come out when you let the air out. The Fox service manual mentions this and recommends that you put a rag over the schrader valve when relieving the pressure in the shock.