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Well, checked the breather again. Basically it is a tube with "umbrella" over it. Before the "umbrella" was rotating freely and it had some vertical motion too. Now it was stuck in place very hard. Seems that combination of oil fumes and dust had done their work and rendered the breather non breathing. Of course I could have verified that if I had removed the breather and tried to blow through it but now that I jiggled the "umbrella" free I can't do it anymore until that happens again ;-)Hopefully that was it.
Does this work ?https://ibb.co/yFV9gJTbThe hole is indeed twice as deep as the seal is but the seal was at the top. No wonder it did not seal when you look at the shaft.
So it stopped leaking once all the oil had run out, that's not good.
Have you tried pushing the seal back down?
If the oil comes from the shaft tunnel, wouldn't that suggest a leaking output seal from the transmission Or am I missing something? In most bikes, the shaft/cardan tunnel is dry.