what do you think the problem could be?

 

Failed oil seal (see below). For talk on changing it, see http://honda.lioness.googlepages.com/distributorbearing


Pretty common. Best fix is to replace the whole distributor housing.

 

^^ i was thinking the same.

 

Nice diagram! 94EG8 mentioned that the seal can be replaced, but you'll have to do a search to find the thread.

 

Thank you, though I trust it is obvious most of the black-and-white work is from a manual free online to the public somewhere. I added the colored identifiers. You can definitely just replace the seal; I discuss this at the site I linked as well as list a few places to purchase it for around $15 total. But if the housing is old, the OP needs reliability, and the OP can afford it, then I would lean towards a whole new housing. The bearing, three sensors, and wire harness on these housings all are a roll of the dice after about 12 years I would say.