Rob,
I still get the feeling that the oil level in the timing chest is abnormally high. Or for some reason that particular guide is exceptionally worn. The lower cam wheel would tend to chuck oil at the front wall of the timing chest where the tappet guide is. But being a dry sump model, there should not be that much oil in the timing chest.
There are no seals on the tappet stems. The tappet guides are tapered on the outside, and fit in tapered sockets. At some point they added a groove around the outside for a felt seal (not sure if the C32 would have it), but this was to seal between the tappet guide and the crankcase and not the tappet in the guide.
If the tappet or guide is exceptionally worn, you should be able to wiggle the end of the tappet up and down.
There is no problem with demagnetizing the dyno by removing the timing cover. The only way that could happen is if you remove the dynamo armature from within the solid magnet field poles. If you take the sheet metal cover off the dynamo, you can remove the two screws that attach it to the timing cover without disturbing the armature. Make a note as to which holes the screws engage and the orientation of the dyno. There are a series, and combinded with the 1/16" eccentricity of the dyno allow one to adjust the gear drive back lash by rotating the dynamo and using alternate screw holes. With the dyno out of the way, you can get to the last timing cover screw (which is a slotted headed screw).
Doug
