  We present results from XMM-Newton observations of the obscured QSO 1SAX
J1218.9+2958. We find that the previously reported optical and soft X-ray
counterpart positions are incorrect. However we confirm the spectroscopic
redshift of 0.176. The optical counterpart has a K magnitude of 13.5 and an R-K
colour of 5.0 and is therefore a bright extremely red object (ERO). The X-ray
spectrum is well described by a power-law ($\Gamma=2.0\pm0.2$) absorbed by an
intrinsic neutral column density of $8.2^{+1.1}_{-0.7}\times 10^{22} cm^{-2}$.
We find that any scattered emission contributes at most 0.5 percent to the
total X-ray flux. From the optical/near-IR colour we estimate that the active
nucleus must contribute at least 50 percent of the total flux in the K band and
that the ratio of extinction to X-ray absorption is 0.1-0.7 times that expected
from a Galactic dust-gas ratio and extinction curve. If 1SAX J1218.9+2958 were
100 times less luminous it would be indistinguishable from the population
responsible for most of the 2-10 keV X-ray background. This has important
implications for the optical/IR properties of faint absorbed X-ray sources.
