HI GA,
Scale insects cover lilac trunks and branches with scaly bumps that can be scraped from the branch. The hard covering protects the insect underneath. Scales extract fluids from the plant, resulting in stunting, leaf yellowing and premature leaf drop. Scales may infest lilac, ash, maple and many other trees.
Depending on the species, scales lay their eggs on the bark in the fall or spring. Eggs hatch in late May or June. Young scales (crawlers) are small (1/10 inch), mobile and pale yellow or orange. Later in the season, their legs wither and a hard shell develops over the body. Beneath the shell, they continue to feed, and the females lay eggs.
A good planting site and adequate watering and nutrients promote healthy growth that helps lilacs resist scale infestations. Prune heavily infested branches. Be sure and dip your tools in a solution of one part bleach and nine parts water between EACH cut. Spray twigs, branches, and stems with horticultural oil in the spring before buds expand. During winter, scrape parent scales filled with overwintering eggs from infested tree parts by lightly rubbing with a plastic or teflon type pad. Be sure to have a cloth under the area so you can catch the scales and dispose of in the trash. Insecticidal soap or oil sprays, applied at three to four day intervals during the crawler stage, can be effective also. Dormant oil sprays have not been as effective on oystershell scale because overwintering eggs are well protected by the hard scale covering. They work better when applied in spring after the egg covering has weathered for any you can't scrape off.
Here's a picture of oyster shell scale. They also get San Jose scale.
http://www.kiowacd.org/images/oystershell_scale.jpg
How to prune lilac.
http://www.gardenersnet.com/lilac/lilac02.htm
Having a