Maybe yes, maybe no.
That area is sealed by an O-ring part number 340 022 01, item 39, page 38 of your 03 parts Manual; a sprocket spacer part number 240 0464 01, item 24, page 32, and a seal part number 350 006 01, item 15 on page 32.
A counter bore in one end of the spacer captures the O-ring and squeezes the O-ring against the sprocket shaft and the inner race of the roller bearing in the case, thus sealing off any oil from leaking out between the shaft and the spacer. This only works if the parts are assembled correctly and the sprocket and retaining clip fit properly on the shaft causing squeezing of the O-ring. Some times folks use after market sprockets that are not as thick as the OEM sprockets. This will allow the spacer to back away from the O-ring enough to allow oil to leak. If this is the case, then you need to either install a shim washer of the necessary thickness onto the shaft between the sprocket and the spacer or use a sprocket of the correct thickness.
Rarely though the problem is a damaged seal, item 15, that will need to be replaced, or the spacer may be damaged and have to be replaced. Maybe some body took it apart and got some dirt in the seal which could cause it to leak. The purpose of the seal is to keep oil from leaking out over the outside diameter of the spacer and dirt getting in.
There, I have stopped rambling.
Hope this helps,
Joe
