Exhaust leaks

I noticed when revving it smoke was coming out of the cloth shroud around the wires coming from the magneto. I had just replaced the magneto and cleaned it from the winter. I left it outside all winter and am afraid water has gotten inside and froze or somethomg.
 
Are you sure it's exhaust and not steam from water getting hot? If there is water in there it could short out the mag. If there is oil and gas in there you probably have a broken or displaced crank case seal. There is one on the mag side and one on the clutch side but they sell them together. You should check it, it's possible it just got displaced and isn't damaged. If the seal is leaking you should lose compression and power or it might not even start.

Replacement seals---> https://www.ebay.com/itm/2-Pcs-49cc-66cc-80cc-Motorized-Bicycle-Motor-Crankcase-Crank-Case-Seals-H-SL14/401392911185?ssPageName=STRK:MEBIDX:IT&_trksid=p2057872.m2749.l2649
 
Are you sure it's exhaust and not steam from water getting hot? If there is water in there it could short out the mag. If there is oil and gas in there you probably have a broken or displaced crank case seal. There is one on the mag side and one on the clutch side but they sell them together. You should check it, it's possible it just got displaced and isn't damaged. If the seal is leaking you should lose compression and power or it might not even start.

Replacement seals---> https://www.ebay.com/itm/2-Pcs-49cc-66cc-80cc-Motorized-Bicycle-Motor-Crankcase-Crank-Case-Seals-H-SL14/401392911185?ssPageName=STRK:MEBIDX:IT&_trksid=p2057872.m2749.l2649
I ordered the seals and will put them in next week when they arrive thanks for the input.
 
note also, that some cases have the 4 mounting holes for the stator drilled all the way into the crank area, so the 4 screws holding the stator on must be very tight against the case to seal properly
 
It could just be the wd40 burning off. There's no way I can think of that would allow exhaust gasses to bleed into the mag housing.
 
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