Also check that the clutch is correct adjusted.
If the arm have to much angle from where it should contact the sealing surface on the boot,
the spring inside the boot won't be able to add a even pressure all around in the boot...against the lever arm.
I checked and found clutch was out of adjustment, THANKS, Inge K! (78mm)
So I got it set at 74.6mm, re-set the rod push bolt at the lever and free play at the control. The boot now looks to fit a bit better.
Also lubed the barrel.
The oil smells of gear oil. So apparently that is completely normal as there is no inner seal to prevent this. Though there is an o-ring in there that could be bad. Im not exactly clear what the o-ring does...maybe its what keeps the oil from traveling into the clutch disk?
Got things dried out again and gonna wait and see if the mis-adjusted clutch was the culprit. (deforming the spring and not applying even pressure around the boot OR the boot is just showing its age and needs replaced.)
I will report back later.
Thanks guys.