Craig, The crankcase and primary area vents out this gap between the slinger and the ET 164 Hat shield pressed into the generator opening.........A lot of folk like to seal this off with a gasket/O ring arrangement or the usual half a tube of sealant.........The gap should be as close as possible without the slinger actually touching the ET 164, But also the generator sprocket needs to be set centrally on the chainwheel sprocket. There should be some clearance for and aft, and up and down of the sprocket teeth verses the chain rollers, this because the chainwheel moves around quite a bit......When the sprocket is set up wrong, and the chainwheel bushes are worn, this tends to destroy the white plastic generator drive sprocket quite quickly.........The teeth on it are actually wider than the stock steel one so this makes the set up that bit more important.........Sometimes you even have to shim the lower generator cradle up higher on top of the crankcase to get the sprocket set up correct, done this a few times. The trick to oil leaks coming from this area is to check the primary oil level on occasion and drain a little off.......If the level is say a 1/2" higher than the level screw on the primary cover, then it generally will start to loose oil at this opening.