Hey Charlie
Im not sure how wrench savy you are with a toy or a car but these engines can be easily damaged if not dismantled properly. Could end up costing more in the long run. My suggestion...if you are not 100% confident in taking this engine apart is to LEAVE THE ENGINE COMPLETE and remove it. There are very few mechanics that have a knack for these engines...and what works to replace the parts within. Not to say that you couldnt get a rebuild locally...but for it to last and make it worth the money BOX IT and ship it to someone that has done FL engines. By leaving the engine complete you will be giving the builder a chance to leak test prior to teardown (a step very important to a 2 cycle inspection)
Livewire is correct in saying that crankshaft seals are a good source for engine AIR LEAKS...but this is something that may start you down the road of a total rebuild QUICKLY. It is a 1985 Engine and most likely has had some type of top end repair over the years BUT if the crank is ORIGINAL and the Main Bearings or Countershaft Bearings are worn...then you may be out of your leauge. THIS IS NOT A GOOD POINT TO START CUTTING CORNERS. Somebody with EXPERIENCE needs to do the stuff in order to not ruin good parts.
You could do some in the garage things to check and see if you may have worn parts BEYOND the top end. WITHOUT TEARING THE ENGINE DOWN...to see if you need to remove it and send it out for rebuild. I will give you some things to check...but only if you PROMISE and SWEAR that you have a METRIC socket and wrench set and are capable of going step by step...and dont jump the gun on me
I just so happen to have a complete 350 @ the shop and a totally torn down engine to show you some pics.
Is there a chance that you just tried to ride this machine...without draining and changing the fuel (pump gas) after it sat for a period? Then you had a problem after a short ride?