Just from oil seepage at the head, slow leak over time, took awhile to clean this machine.
Head gasket was pretty flat andstiff but more or less intact.
Took awhile but I got the mating surfaces and the piston, valves and chamber de-carbon-ed and clean.
Cylinder looked normal with plenty of cross-hatching visible.
85 psi compression.
Zero gas leaking from carb float valve or petcock.
I dont know what else I could check for the stated fuel-in-oil problem, so I assembled it and re-checked fuel and spark.. starts and runs fine. I tilled some earth for awhile and did not detect fuel in oil.
Sent it back to its home to see how it does the rest of the spring.
Time will tell