With the breather system you have that pipe is not required. Block it off and clean the area to make sure its not seeping oil from where it enters the valley area through the block as they can seep oil form that joint.
I just spent an hour doing a big explanation about this thing and the forum logged me off so I lost it.
So I will briefley say that with the open breather system you have into the air filter.... If that pipe is still spitting vapours hard enough to spray oil out that your engine is breathing heavily possibly due to wear of the rings / pistons / bores? OR that your pipes from the rocker covers are choked or too small.
Having said that!! The breather pipes from the rocker covers MUST run uphill from the rocker covers into the air filter and prefereably have some metal gauze filters / flame traps fitted. Other wise oil vapours will condense in the pipes and form a blockage at the Tee piece. What you have fitted is basically a large oil trap at that Tee piece. The idea is for oil to be allowed to naturally drain back down those pipes into the rocker covers. Even with vapours travelling at X veloctiy up those pipes into the air filter, oil droplets will seep backwards to drain back into the rocker covers as soon as they become too heavy for the escaping vapour velocity to hold them in the pipes. So if you have oil logged the Tee piece this could be creating a restriction that is holding blow by gasses back and forcing them to exit via the old valley breather and spit oil vapour out which will gather on and surface it meets to form droplets.
We are talking fractions of a PSI for this to happen !!
One way to resolve this issue is to do what I did back in the day. Fit elbows to the rocker breather pipes. Fit the Tee into the air filter pan as close as possible making sure that you go up to the 3/4" connection into the air filer with a 3/4" tee. Fit 3/4" pipes which run downhill to the 1/2" connections in the rocker covers and make them fit with what ever fittings you need to use. The larger bore 3/4" lines from the 1/2" rocker coneections will reduce vapour velocity and reduce the risk of oil making it up into the air filter.
You may have a perfectly good working engine that is suffering form an incorrectly installed rocker breather system. Or an old smoker that is blowing so much chuff past the pistons that all or your breather pipes cant cope.?
If you want to do some sort of test with the system as it it then clean all that crap up and then remove the pipes from each rocker cover and route these pipes into a catch can or bottle of some sort instead of the air fiulter so you can catch whatever comes out.
