Update on this. I looked it over again, and it appears oil is gushing out of the governor shaft seal area when running.. it looks kind of involved to replace but I'm not against doing it I just need to make sure I have all the necessary gaskets when I tear this apart. Do I need to remove the engine from the tractor or can I just work on it inside the frame? I'll do the head gaskets also they were on my list because they are known to blow. I will have to dig a little further into it to really get a idea.. Thanks!
You don't have to remove the engine, but it will be MUCH easier to work on it. Removing the engine on these isn't bad, it's 4 bolts from the bottom, a wiring harness connector, and the drive belt for the transmission. You've removed the deck and deck belt, and IMO that is half the battle.