Leaky pushrod tube oil seals are a common cause of oil leaks on the VW air-cooled engines. To fix the leak, you have to remove the pushrod tubes and replace the seals on both ends.
It's not a technically difficult task, but it is time-consuming and will try your patience. It will be easier to do the job with the rear wheels removed.
NOTE:This procedure applies only to the Type 4 engine. To replace the pushrod tube oil seals on a Type 1 engine is much more involved, since the cylinder heads have to come off.
To remove the pushrod tubes,
1) Remove valve cover -- get your big honkin' screwdriver under the bail and pry it down (don't pry it up. You'll regret it. Ask me how I know).
2) You are now faced with your rocker arms. Note that there is a thin metal wire spring thing that is very oddly shaped and goes the length of the head, fitted under the rocker arms and holds the pushrod tubes in place. Pay attention to how it goes because you will need to know later. This is another reason for doing only one side at a time so you can reference the other side for reassembly. Anyway, loosen the rocker arm nuts a bit so you have enough slack to get that spring out. Try not to bend it up too much.
3) Get a clean paper towel or something similar to keep all the parts on. Put the spring on the towel. Now remove the rocker arm nuts and washers and put them on your towel. Don't lose 'em. Pull the rocker arms off the studs and be careful as they will want to fall apart as soon as they are free from the studs. Put them on the towel next to each other like they are in the engine. This is one of those jobs where you want to avoid mixing stuff up.
4) Remove a pushrod (I do these one at a time so I don't get the pushrods mixed up. Just pull it right out. Sometimes they are full of oil and surprise you. Lay it on the paper towel, make sure it's straight by rolling it. If it's bent, time for a new one.
5) Remove pushrod tube. You do this by twisting/pushing/pulling it out through the cylinder head. Many say not to use pliers on the tube but if you use pliers and squeeze lightly (so as not to crush the tube) you'll be OK, I used pliers when I did it and they're MUCH easier to get out that way. Just be sure to squeeze very lightly. You usually need to set up a twisting motion to break them free and then pull back firmly but gently and pull the tube out through the head.
6) Clean up old tubes or replace them. Use parts cleaner, like brake parts cleaner or carb cleaner. Get all the crud off the tubes, you may find that they are not supposed to be black. You may also elect to purchase a complete set of new pushrod tubes. Remove the old seals from the tubes if you are reusing them. I usually get them off by getting a screwdriver blade under the seal and prying it off the tube.
7) Install new seals. There are two kinds available. One is the stock VW seal and the other is the seal that gets used on the Porsche version of the same engine. Buy the expensive Porsche version. Word is they will outlast the VW seals quite well. You will need 16 seals for the job and the seal for the case end of the tube is smaller than the seal for the cylinder head end. So you should have 8 of the large seals and 8 of the small.
8) Clean up the sealing surfaces on the cylinder head and the engine case. Use a paper towel moistened your parts cleaner of choice. Be thorough, any dirt on the sealing surface will cause leakage. Take your time and do it right.
9) Repeat with each pushrod tube.
10) Put everything back together. When reinstalling the pushrod tubes, you need to make sure they seat all the way. They don't tend to want to go all the way in by hand. I used a big 1/2" drive extension as a drift and gently tapped the tubes home with a hammer. Be careful doing this that you don't pinch the seals on the head end.
Make sure that you put that wire spring thing back in correctly. It holds the pushrod tubes in place. Again, don't mix up the pushrods, rockers, etc. Also, when putting things back together, you will want to make sure that the pushrods seat correctly in the lifters. If you twist them around by hand you can just feel them slip in where they're supposed to be. After you're done, put new valve cover gaskets on (don't use sealer, just a thin coat of wheel bearing grease on both sides of the gasket). If the sealing surfaces for the valve cover gaskets on the heads are rough, it is wise to take some steel wool and use it to smooth the cylinder head surface out. This will stop those pesky valve cover gasket leaks. If you have solid lifters, you will need to adjust the valves after this operation (that's another whole procedure, but is written up well in Muir). Some say if you have hydraulic lifters you also need to adjust but I've seen it done without adjusting and it's been fine.
11) Have a beer!