In that case, I'm willing to bet it's leaking from the valve cover.
Oil is a funny thing, the way it leaks sometimes. It might not look like a drip, but more like a wet area. I'd blast the whole area with carb cleaner, wipe it all nice and dry. The keep an eye on it.
And as somebody else said - if you're getting air escaping past the spark plug, you might want to try new plugs - or tighten them a bit.
As for the soot, I'd clean that up too and keep an eye on it. If it builds back up, I'd back off on the gas mixture, lean it up a bit. (I'd double check the situation by yanking the plugs and looking at them. Are they black? - if so you're definitely running too rich)
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Today's Featured Article - Timing Your Magneto Ignition Tractor - by Chris Pratt. If you have done major engine work or restored your tractor, chances are you removed the magneto and spark plug wires and eventually reached the point where you had to put it all back together and make it run. On our first cosmetic restoration, not having a manual, we carefully marked the wires, taped the magneto in the position it came off, and were careful not to turn the engine over while we had these components off. We thought we could get by with this since the engine ran perfectly and would not need any internal work. After the cleanup and painting was done, we began reassembly and finally came to t
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