TOPIC: Oil Leak? Where is it coming from?

So I got the engine(volvo BB70) running real well and then noticed a good amount of oil coming out of the "air Vent" plug in the bell housing (fly wheel housing between the engine and transom) at higher rpms. I didn't engage the lower unit. So, where is it coming from? What should I do? The engine oil pressure gage seemed fine.

is it only oil or a milky oil water mix?

there should not be anything in the bellhousing. if it is just oil,then the rear seal on the crankshaft may be leaking. a milky oil water mix,then i would check the bellows and the input shaft seals going thru the bellhousing. the oil pressure guage would not show this. without getting my volvo manuals out,it looks like there is a removable plug on the bottom of the bellhousing. if you can,remove this and see if anything drains out an if so how much. it could be being picked up by the teeth on the flywheel and then being thrown at higher rpms. skipp

The oil seems to be very thin like it could be from the outdrive. It's not milky. I lowered the leg and will see if that changes things. I bet some of the oil has leaked through the bellows to the bell housing. Might be time to replace seals in the upper unit of the outdrive? What do you think? It makes sense that the teeth on the flywheel may be spattering the oil sitting in the bottom of the bell housing.

ok,we need to start over. i dug out my manuals for the BB70and and the aquamatic outdrive. the volvos i have been messing with are newer and somewhat different that the older aquamatic 100.
the breather does not open into the inside of the bellhousing but opens just above the bearing supporting the primary shaft. there is a seal on the motor side of the bearing. on the aguamatic the prop shaft runs in oil but the upper gears are pressure lubricated by an oil pump drawing from the lower housing oil. the oil then goes thru passages to lubricate the upper gearcase. there are no seals on the gear shaft coming out of the drive between the upper gearcase and the universal coupling. so,it would be possible for oil to get into that area with the motor running and the drive in the up position. the primary shaft would be spining along with the upper gearcase. all shifting is done in the upper gearcase on the aquamatic. this is the reason it is so simple to change rotation direcion on them.

So then, I'm guessing the problem may be solved simply by keeping the outleg down when running the engine in neutral while on the trailer? I'll try it out tomorrow afternoon and let you know how it's going. I might try draining a bit of the oil out of the leg. I think I might have overfilled it...in which case, it may just be emptying itself

Tried it out today and everything seems alright. I smelled the oil that had leaked out and it was the same as the outdrive oil...so it just had backed up when the outleg was tilted up. I ran it for a while in neutral and in drive and everything seemed ok. Thanks for the help!