Pull Starter Seeping Oil

If the starter is leaking from the plunger, it's probably just dripping down on the mount. No big deal... The starters were actually designed to seep a little oil, to keep the bushing the plunger runs in lubricated. Originally there was no seal in that shaft. When the starter drive was not engaged the gear inside pressed on a leather washer (shown in red in the drawing) that was in turn pressed against the housing. Pulling the starter allowed a little oil from the leather onto the shaft and then into the bushing.
Over the years attempts (and modifications) have been made to stop the seepage, notably, counterboring the housing to accept a seal, which also reduced the length of the bushing. I think the reduced lubrication combined with the reduction in bearing surface only accelerates the wear of the bushing. As the bushing wears, the shaft is allowed to rock slightly and the seal starts to leak, again.

Read more in this illustrated file: Pull-Starter-Plunger-Seals.pdf

-- John Cooper