Normally oil sits below and inside the crankcase where it usually stays. However, a leak somewhere in the oil system can cause the oil to travel from the carburetor and into the combustion chamber, which sits just above the crankcase. The most common cause of this happens when the mower was tilted onto the wrong side, for an oil change or other maintenance. As the oil seeps out of the crankcase it will exit the engine and drain directly into the carburetor. After the mower gets started again, the oil will shoot through the chamber and out the muffler. Always tilt the engine with the carburetor up.
Another cause of an oil leak around the muffler area on a Lawn Boy mower occurs when the operator overfilled the oil tank with too much oil. Each Lawn Boy mower uses a specific amount of oil; if this is exceeded, the oil will have nowhere else to go, except into the combustion chamber and out the muffler. Follow the oiling instructions for your model provided with the operator's manual. Dump out any excess oil before starting the mower again.
The oil dipstick nozzle extends down into the oil tank and protrudes slightly above the engine. Around the nozzle, a rubber O-ring provides an airtight seal, keeping the oil in the tank. If this O-ring gets damaged or lost, usually from improper dipstick removal, the oil will seep out of the tank and may migrate anywhere on the engine. Conversely, the source of an oil leak can be difficult to determine and what looks like oil on one side may be coming from another area entirely.
The oil sump sits at the bottom of the crankcase and collects all of the used up oil. It will also trap any foreign particles in the oil, which can cause a backup of the oiling system. This causes oil to move into an area of the engine it shouldn't normally move to. To access the sump, most of the engine will need disassembling. Also, an oil leak near the muffler also causes the engine to smoke. If any of these are the case, stop the mower and take it in to a professional.