Why does oil light come on in my 2004 Neon SXT when dipstick is showing over maximum line?

It can be because the engine has too much oil. Too much oil is just as bad as too little oil, and will have the same effect. Engine damage! The crankshaft spins as the engine is running and comes in contact with the excess oil. This creates a froth of oil & air. Air mixed with the oil creates a situation where the oil does not lubricate properly. This may cause your oil light to come on because the pressure drops. First thing to do is drain all the oil out and replace the filter with the correct filter. I recommend Purolator. Add exactly the correct amount of oil as outlined in your owner's manual. If after doing this, the oil light is still on, check the oil pressure sending unit to see if it is connected and has no leaks. You may need to replace the sending unit, and you may need to have an oil pressure test run to see if the oil pump is functioning properly.

It can be because the engine has too much oil. Too much oil is just as bad as too little oil, and will have the same effect. Engine damage! The crankshaft spins as the engine is running and comes in contact with the excess oil. This creates a froth of oil & air. Air mixed with the oil creates a situation where the oil does not lubricate properly. This may cause your oil light to come on because the pressure drops. First thing to do is drain all the oil out and replace the filter with the correct filter. I recommend Purolator. Add exactly the correct amount of oil as outlined in your owner's manual. If after doing this, the oil light is still on, check the oil pressure sending unit to see if it is connected and has no leaks. You may need to replace the sending unit, and you may need to have an oil pressure test run to see if the oil pump is functioning properly.