Hello Tom,
A half-gallon of oil in the crankcase is too much. I would expect it to have been smoking a lot with the oil level that high. Remember there are two compartments. The crankcase should be nearly dry. The timing chest should have some oil in it (1/4 pint?)
With the recirculating system like the A31, Douglas recommended leaving the regulator (sight glass) valve well open. Only restricting it sufficient to prevent over-oiling or excessive consumption. This is a little different than total loss systems like on the EW or 2-3/4hp models, where you only want a just a drop or two of oil going into the engine every few miles. You want a goodly amount of oil constantly flowing into your A31.
It sound to me that either the pump is not scavenging the oil and returning it to the tank, or the oil is finding its way into the engine faster than it can be scavenged. If the pump is scavenging, you should see oil returning to the oil tank compartment from the top of the return stand pipe, just inside the filler cap opening. By design, the oil pump should not be able to pump a larger volume of oil into the engine than the scavenge can remove. So I wonder if oil is draining down into the engine when it is not running, filling up the crankcase chamber. There is a ball and light spring in the joint between the oil sight glass and the timing chest casting. This is a check valve, and it is there to prevent oil from draining down into the engine (and filling the sight glass and then engine) when the bike is not in use. Some models have a valve on the line from the oil tank instead that you close when the engine is not is use. Just do not forget to open it before you start the engine!
Douglas recommended Castrol X.L. My understanding is this is something like 50W. I run anything between 30W to 50W, depending on what is on sale. 20W is probably a little too thin, but otherwise I do not expect running a multi-grade oil in this type of engine is a problem.
-Doug
