Feel around with your hand and see if you can pinpoint any leaks, check the gasket seal under the gear plate. Judging from the picture that looks like a likely place to look. Also, check the gasket at the intake manifold/intake connection as well as the carb/intake connections and check at the exhaust gasket too. You might have to replace one or more of the gaskets if they are leaking. Also, sometimes if you are using a particularly high oil/gas ratio it's possible that oil can shoot out the exhaust and the blow back while you are riding it too, is any on your pants or shoes?
Looks like the seal in there is leaking. The seal is cheap but I don't know how difficult to change out. Probably not too bad. There should be a tutorial on the forum to read through. You'll probably have to recondition or replace the clutch pads but they are only about 5 bucks for a set.
ok thanks crassius I will try that but im sure the oil is coming from here. although I don't know how to fix it I will look at your thread suggestion and hope I can do it. took off the clutch cover plate and the pads look messed up(I think). they do smell of gas/oil, is that normal?