This thread got me to thinking about this again...so I was researching and found this on the internet and ran upon this article from this man. He doesn't say who he works for (which is good, unbiased) just that he is a lubrication engineer. After you read this article you may want to put the magnets in the oil reservoir. Don't forget these are just companies wanting to sell their products and will tell you things in a way that makes sence to you and they are very good at it. Additionally I am not trying to stir the pot, just my 2 cents.
Michael Roy
Speaking as a lubrication engineer that specializes in the filtration area of this field, I would like to clarify a few points. First is the size of particulate that is of concern, the loose metal that does 75% of the damage (wear) to an internal combustion engine is under 8 microns. That means they are invisible in small amounts and would only be seen when millions are concentrated in one spot. Fortunately, if you put a magnet in the oil stream of an engine you will capture these sizes. Not just large particulate but actually all the way down to 1 micron, so you technically reduce wear by at least 75% by using them.
The question is where do I place them to be most effective and cause no danger. That answer is easy... You want to put them INSIDE the filter and in the direct flow of oil but AFTER the factory media has done its job of filtering particles above the filters' threshold. Again, we only need to capture the particulate that the filter DOES NOT catch, so we only need to place them in the downstream or inside the filter.
There is a technical note for those of you that think you can put magnets on the outside and this is a critical point:
Wrapping or placing a magnet on the outside of an oil filter is not only the wrong way to capture damaging particulate, it actually lowers efficiency of filters and restricts oil flow. Think about all the large metal particles that will be captured, the ones you "see" when guys cut open the cans. Wouldn't those particles have been captured by the paper media? Of course they would because the filter element is 20, 30 or 40 micron rated and the particles are 100, 200, 500, even 1000 micron (Note: A human blood cell is 10 microns, so anything you can see is hundreds). Additionally, pulling and concentrating all that large garbage to one side or around the inside of the can is going to slow oil flow as it travels up the inside wall. Remember there is very little space between the paper and the metal container shell, so anything rough on this surface is going to reduce efficiency. Fact is the inside of oil filter casings are sprayed with super smooth coatings to try and increase flow and eliminate resistance, so you don't want to defeat this process.
P.S. You should NOT use Neo magnets on oil filters, they are not rated for the heat and will lose strength over time.