I just scanned the responses, so forgive me if I repeat somebody elses thoughts. I would start with the following:
1. Check to make sure the intake manifold is tight
2. Install new plugs and run with leaded gas to determine if the carburetor is too rich.
If the intake is tight check valve seals and compression to determine where the
oil is coming from.
It may not be as bad as it looks right now.
Good Luck