Tom is right on the steel wool, get rid of it. The previous owner probably put it in to stop the engine from dribbling oil and making the engine a mess and stinking. You probably need to check the rear main for clearances and get them right. You need .0015-.002 on the crank to bearing and .004-.012 on the thrust. Not a difficult job but, daunting for a beginner. You may also find when the cap comes off, it has a rope of neoprene seal that is leaking. These can be fixed but not without removing the crank, big job.