I am looking for the name of a bad karate film from the early 80's where a guy has to fight different challengers for a chance to see a book that will show him "himself". There is one scene where he comes across a man sitting in the desert in a large pot of oil. Apparently the guy was trying to erode off his testicles. Any ideas?

If by "bad", you mean "awesome", then you are certainly speaking of Circle of Iron.