That's exactly where it's coming from (your oil reserve tank), and not really a good sign of things to come. In order for that to happen your inner crankshaft seals are leaking to allow the case to fill with oil and your outer's are probably leaking as well and that causes your engine to run far to lean.
For the time being, just install a hose pincher to stop that flow of oil on the supply hose to that motor and attach your DESS key to it so you don't forget to remove it when you start the motor.
Compression check it right away, if it's just on the low side you found it in time for a rebuild. Remember these motors are no longer made and your always better off to have a competent shop rebuild your original motor to factory compression specs.