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YZ 125 oil leak

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I recently bought a 94' YZ 125.

The engine is quite fresh and has 4 or so tanks through it.... I took it out for the first time today and spent about 4 hours on it. Bike worked flawlessly and had a ton of power. This thing pulls forever. It always started in one kick, but I found that this thing kicks over ridiculously easy.

I took it out again in the evening after letting it cool completely, so that a couple buddies could try it out. First problem it had was not being able to start, I kicked and kicked, again with next to no resistance in the kick start. Finally I decided to push it and start it that way, it fired up instantly, and I was not moving very fast. I let it warm up for 5 mins and went at it. Out of no where I started to smell burning oil and noticed oil spitting out of a port on the back of the engine, under the carb. When I smell oil I think HOT, so I shut it down. It began to smoke and I noticed a couple of drops of oil hanging from the muffler... My fuel/oil ratio is 40:1.

Did a vent hose fall off of the port and cause oil to run onto the engine, or should there be a hose be routed to some other component?

Here is a picture... If it is a breather, I would like to know how it should be routed, so that I can install a new one.

Picture008-1.jpg

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Hello

So how recent is recently? How many hours approximately has the engine? Did you put a new topend in after having bough the bike?

The picture shows a breather port, there should be a hose which routs toward the end of the engine.

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