Try our re-instated info resource - "Aladdin's Cave" (Main menu)- sorry it's taken so long to fix
I've never worked on the XL350 models, but often on the XL250 version.That 'O' ring between the clutch operating arm and casing looks wrong, I think somebody has messed with this before.Should be a small 'O' ring that fits on the shaft in a groove out of sight and of course a small oil seal at the other end.Looks an interesting project.Good luck.