'96 GT I starter real oily

[smallshopguy]

Got this '96 in and the lady sez it wont run right and dies when coming off high rpm . Runs OK at high rpm. Has "rebuilt engine" by someone else. I tried to start it and with a good battery and old battery out, all the 'ski does is click the starter , pull the plugs , spins real slow. I pulled the starter and it was pouring out oil !
Sounds to me like crank-shaft oil seals are no good.
Questions are:
does the alternator run in an oil free area?
how is really thin gassy smelling oil getting into starter?

 

[sunbaby69]

does not have alternator---- has magneto, stator and pick up and yes there is a seal between stator compartment and crankcase. Sounds like bad rotary valve seal...