First off not pointing fingers here just posting what I found and believe the issue to be.
I brought the engine to work today and measured everything that I thought would cause this problem so mainly just the diameters of the crank, engine case, PTO housing and PTO shaft.I used a very high quality Swiss bore gauge and Mitutoyo digital micrometer.
What I found was this.
First I measured the crank case I.D. at .6330 , this was the area of the case that is designed to seal the engine and crank with very little clearance between them and the oil from the fuel.
I then measured the crankshaft and it was .6295, so that is perfect , typically I have seen a .003 to .004 range used between the crank and case to seal the engine.
Nothing wrong there.
Measured the PTO housing at .455 it's a straight bore unlike a case that has the seal bore and then clearance bore.
This is where I believe the problem is, the PTO shaft is stepped down(two different sizes), the largest dia being the bearing fit dia was perfect but the shaft dia is reduced right after the bearing to .4475 which leaves almost .008 clearance between the housing and the shaft.
If Nova Rossi just extended the bearing dia on the PTO shaft by .375 and opened the PTO housing .001 more I believe the issue will be solved and the engine will seal properly.
Tim