Float adjustment when removed intake carb at same level and float cut gas off scale build up on float and sink just enough to let gas over fill bowl..

Did you flush the fuel line before reinstalling the needle.
Often there can be crud in the fuel line that get's broken loose when removing the line.

Chances are, when you disconnected the intake, the float may have gotten "jiggled" just right to seat the needle properly.

IF it was only leaking when running, it would just run rich, and possibly flood out if it was leaking severely.

When the oil ends up in the crank case, it's ran into the cylinder and then past the rings.

Yeah that's probably what happened. I did clean the lines and the tank pretty well but you never know. I think I'll get a new float and needle and try that. Gator mentioned that just a small amount of scale buildup on the float could sink it just enough to drop the needle. Hmmm.

cmrusso - Bill and Gator are most likely right on suspecting the carb needle/float. But if that doesn't fix the issue, go back and take a hard close look at the diaphragms in that fuel pump for cracks that might be letting raw fuel pass thru into crankcase while working...