Removing pedals off motorised bike and adding pull start

Yup... crank seal is bad... You can order new ones from several of the vendors who have their links posted on the sides of this page... I like dealing with Thats Dax anytime I can, I've also bought from PistonBike who also may have the seals you need. These are easy to replace, just pry out and push the new ones in.

There's a seal just like that on the other side of the crank under the bevel gear, it might be worthwhile to replace that one as well if it's in similar condition. If you got your engine out or apart this is a good time to change the crank seals.

The thing about running it with a bad seal or both seals bad is that it'll have that air leak where it can suck in air bypassing the carb and it can run the engine lean or at the least, make the engine very difficult to tune. It's just cheap insurance to replace while its apart and these seals only cost a few dollars each.