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Some of the Universals had the alternator attached to the AL casting that forms the cover for the valve gear. These have been known to form hair line cracks. I think Marine Diesel Direct has a retro kit.
Sounds like you have a freeze plug that is corroding out or otherwise failing. This might be plugging a pressurized oil passage in the block; it would be very bad if it failed while the engine was running. If you can take a picture and post it here it would help determine the issue. You might also want to call a marine parts distributor like TAD or Torreson marine (both have websites) and ask for some technical assistance.
My partner and a buddy fixed the leak. After cleaning off the oil, running the engine to find the drip, they discovered a hole (drilled like it was supposed to be there) that had the plug partially missing.
The theory is either a freeze plug or, since these are marinized Kubota tractor engines, it was a hole not needed for marine use.
They scrubbed the area clean, applied two layers of JB Weld and we no longer have a leak!
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