My 1st reply was based on the assumption you have an Alpha gen 1. I based that on the fact you mentioned the o-ring groove. Later Alpha gen 1 were made without the o-ring groove and are interchangeable. More than 1 early driveshafts snapped there, primarily V8s.
If I am correct, then that seal keeps water out only. The oil seal is bigger, about 1 inch higher and rides on the gear hub outer diameter. So a groove worn in shaft, worn seal or even missing seal will not leak oil. Note that I am not discounting the shaft wear as not important but not where the oil comes from. Because of this design, dropping the lower 1/2 for example to change the impeller will only leak oil at the small oil passage.
The gear however is an assembly of gear/lower hub part and the shaft pressed into the top of the gear with a small (thin walled) o-ring at the interface. The o-ring is does not have any relative movement and probably could leak filling the cavity with oil. I've never seen one leak.
For reference, Alpha gen 2 had a design change and the splines were in the oil reservoir. Because of this design, dropping the lower 1/2 for example to change the impeller will leak oil at the small oil passage & have it rush out at the shaft area too.
What bolt is bent? The only 4 I recall hold the water passage in place. No oil involved there.