If your KTM 2-stroke (250 or 300) looks like it sprung an oil leak out the side of the cylinder, behind the expansion chamber, you are not alone. This is a pretty common issue and really does little harm. Other than make it a little messy in that area. But there is a simple cure.
First, unless something is really wrong, which is rare this is a simple gasket sealing problem. If your bike is running fine and performing normally, none of these issues will be of concern. But if you have a leaking crankcase main seal, coolant getting into the clutch/transmission, severely overfilled transmission fluid or a clogged transmission vent line then the oil leaking out of the gasket is only a small part of the problem, generally not a result of one of the before mentioned problems.
Here is how you fix it and what you need:
There are some updated parts for older models and some even claim some of the older gasket parts provide a tighter seal. But we have never needed anything more than the sealant to make it right.
The simple way to do this is to remove the expansion chamber and then clean off the area. Then remove the cover for the powervalve actuator. It slides onto a rubber gasket that has a rounded lip that mates with the cover. The leak is usually coming from the seam between the cylinder, the powervalve gasket and the cover– the fit isn’t perfectly tight here.
Further clean the area around here with a drying parts cleaner. Take care with the powervalve cover gasket as it will stay on the bike the whole time since you do not need to disconnect the powervalve actuator.
Apply a small smear of silicone seal along the back of the rubber gasket between the cylinder and gasket and rubber piece as shown in photos. Then place the gasket back in place. Next apply silicone around the lip of the lower part of the powervalve cover, but not too much to make a mess. Then reassemble the cover to the bike. Put the pipe back on and while you have that Silicone (Even better if you use the more heat resistant Permatex 81160 High-Temp Red RTV Silicone Gasket, 3 oz ) out it does not hurt to put some around the O-rings on the expansion chamber opening. Let it set and dry and you’ll not have a leak any longer– and a cleaner bike.
If it seemed like there was a lot of oil leaking out you can simply check the oil level by removing this check bolt, you will be surprised that what looked like a lot of oil was likely not too much.