Thats likely an oil valve on the bottom. My H2B and the like have them as well. You can just block them off with a plate. They were primarily used for emissions in the US back in the day from what I understand.
About that oil leaking out. I'd definitely get that all out. If theres any real accumulation under the crank, the first few throws of the crank could throw enough up in the top to hydrolock the engine. Make real sure you get that cleaned out. If you're still unsure if its totally emptied, pull the plug, put a rag over the head, and push that thing like your push starting it. All will not come out unless the crankshaft get some significant rotation.
Sorry but I dont know where the line would go, likely to the intake tract somewhere. Excessive oil under the crank when its been sitting is common. Likely cause is a leaking check valve on the oil line to the motor (output side of the pump).
75 S3A-RA, 71 RT1B, 77 CT125, 83 HD 1000 Sporster and other toys. Next up.....a 74 H2B in pieces. It'll be just like putting together a big puzzle.