The turbo overspeed light really doesn't mean anything in the Wings of Power/WoP2 versions. It's really just a nice eyecandy that suggests the actual operation of a turbo supercharger even though that system is not modeled in your version of the Thunderbolt. In the real aircraft (and in the WoP3 P-47D with AccuSim version), if you advance the boost lever on the throttle quadrant too far and cause the turbo supercharger's bucket wheel to spin faster than the redlined RPMs, you run a high risk of catastrophically damaging the turbo supercharger. You can't break the turbo supercharger in your version though, so just ignore the yellow light.
I don't think the oil dilution switch actually has any effect with your version either, as I doubt oil viscosity is accounted for in the basic Flight Simulator code. As Oskar said, in the real airplane the switch is there to shoot some gasoline into the oil system to thin the oil if you plan to restart the engine under very cold temperatures. Later, when you restart the engine that gasoline is burned off while the engine is idling. This function is modeled in the WoP3 P-47D w/ AccuSim, by the way.
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