That's not the problem.
The oil in your gas is not the problem. What the dealer is talking about is your rotary shaft seals. You'll notice on the bottom of your oil tank, there are two lines. One is going to a small oil filter and then on to your injection pump. The other line is going to the port (left) side of your motor, in the center. This is the oil line, supplying your rotary chamber. Then, on the starboard (right), the vent line from that chamber is going to the top of the oil tank.
If you switch to fuel pre-mix, you still have to leave that tank on to lubricate your rotary shaft. This shaft is a worm gear that runs perpendicular to your crankshaft and is what controls the timing of the fuel inlet into the engine.
It's location is in the center of your crank, between the two pistons. There are seals on either side of it to keep the oil in the chamber and out of the crankshaft connecting rod areas. When these seals go bad, the oil will run into the crankcase, hydrolocking your pistons from turning.
The only way to repair it is a crankshaft replacement. You can order a replacement for $275.00, pull the engine and change it out yourself.:cheers: