I took the distributor off so that I could clean it up a little, to hopefully resolve my issues, and oil came out of the hole. Now, I know that obviously the dist. is connected to the cam, and that the cam gets oil but is oil supposed to come out when you take the dist off?
Also when cleaning the dist do you take the plastic cap off and clean in there or is it permanently sealed? Cause the screws are insanely tight.

 

Its common for a little oil to drip out of that hole, and yes, the cap IS removable and should be replaced if damaged. Also, your rotor button may need changing as well.

 

well, I damaged the rotor button, pryed it off without taking the screw off, so I will be buying one of those. How do I know if I need a new cap, the one I have is all red, so there are no carbon tracks or anything like that, kinda looks new.

 

Is the oil leaking on the inside or the outside of the distributor housing?

if it is leaking on the outside of the housing it's a cheap and simple fix. You remove the distributor and on the shaft there is an o-ring that seals the shaft to the head. Just replace that and thats it.

if it's leaking inside the distributor there is an internal seal that needs to be replaced. Check the FAQ for a thread on where to buy the seal and how to replace it.

and no, the distributor isn't supposed to be permanently sealed, someone just tightened the screws too tight when putting the cap back on the last time.

 

as an added note, I hope you made some markings on the distributor and head so you dont mess up the timing.