Hi,
Do not block that hole - it is the outlet from the engine breather! It is quite common to find that there is a dampness around the breather, but not enough to cause concern. The breather passage is routed from the inside, through the generator cover, into the timing chest, exiting at the bottom of the case. If you remove the generator cover, you will find there is a non return valve - this should be fitted so that it breathes out but not in. Excess oil coming from the breather may be the result of a missing valve or the valve being damaged. Also, be careful when removing the cover as you will also be withdrawing the generator stator and will have to feed the wires into the top of the timing chest. As the cover comes away, tip it so that the bottom comes out more - then you won't damage the support for the cable.
Regards,
Eddie.