Air goes in and out but mostly out. Your engine doesn't have that many hours so you should have some blow by. When engine is running you should be able to feel air coming out breather hole in the air box .
It's nice and clean. I took off the crankcase breather and blew through it. Completely free and clear. I started it up with the breather hose off and after a minute or two it darted to blow a normal amount of air through it. There's no run out in the crank at all per a dial indicator .006 so this leads me back to the oil seal.....any ideas?
Replace that seal and make sure to grease inner seal surfaces. Also check and make sure the oil return hole is clear by blowing air through it too. If it's clear install the new seal after using the 1000 grit emery paper on crank.