I would agree, this is usually caused by a leaky exhaust cover gasket.  I remember mine as a kid did the same thing.  Perhaps you can just take up on the cover screws which might solve the problem.   The only other thing that spatters oil around is if you have squirted oil into the recoil spring trying to free it up, but I think it is the exhaust cover in this instance.  you can replace that gasket without pulling the powerhead from the lower pan, just takes a little extra time and care to get the block surface cleaned up.  Look carefully at that exhaust cover to make sure the aluminum has not eroded/corroded causing this leakage, although this usually occurs along the water passage, not in the exhaust area.

I would use a heavy duty sealer, such as permatex/OMC typeM/840 sealer on the gasket,  cover screw threads as well.  Be very careful not to plug up that water passage though.  The most important aspect of doing this job is to “retorque” those screws several times after running to be sure no new leaks develop.   Sure, I realize you can’t actually “torque” most of these little screws, just snug them up with a small 5/16″ box wrench.

I guess one of the hardest parts of this job is removing that lovely side pull rewind starter without having it explode it pieces.  Carefully/slowly remove that large bolt while holding the starter pieces tightly together.  Once the threads have released from the block, carefully pull the starter assembly out, push the screw back through the rewind exposing the threads on the back side.  Install a suitable nut on the threads and snug it up so the rewind will stay together and just lay it off to the side.  Sometimes an assistant makes the difference here, just be careful and wear eye protection.  Don’t pull that large screw out of the rewind or you will dislodge the washer/spacer behind the shoulder resulting in a jammed rewind when reassembled.

crosbyman wrote:

fleetwin..

 

are there any water passages to block or be concerned about under the  exhaust plate  ?   I know some larger engines have  exhaust cover cooling but  seems theese little 3 hp just get hot .?

Yes, there is one small water passage closest to the crankshaft, it runs vertically from the bottom of the cover to the top of the cover.   The rest of the exhaust cover is not water cooled, and definitely gets hot…

https://www.marineengine.com/parts/johnson-evinrude-parts.php?year=1968&hp=3&model=3806A&manufacturer=Evinrude&section=MAGNETO+GROUP

I’m guessing item number 40 is missing, the spacer washer, located in between the large shoulder bolt and the rewind cup.   Sometimes it comes dislodged when the starter is removed, it may still be inside there…