So, the engine is burning oil and liquid oil is running around the top of the carburetor and fuel tank. You can see a black hose in that area, connecting to the carburetor just below the air cleaner. Is that where the oil is coming from? That is the breather hose. If the breather is malfunctioning, crankcase pressure can push oil up that hose. If that happens, chances are some of the oil will leak out and run everywhere, while most of it will go through the hose into the carburetor air intake, then be burned by the engine, causing blue smoke from the exhaust.
If oil is passing through the breather hose, you will need to take a look at the crankcase ventilation valve. This is part of the valve chest cover, which is screwed to the side of the engine below the fuel tank. If you remove that, you can see whether it is stuck in some way: it is a simple disc valve on the inside of the cover. Please post a picture of it after you remove it, and we'll discuss it from there. Do not perform any acts of violence on the valve, just show us the picture.
If oil is not passing through the breather hose, we'll need to do some head-scratching and take it from there.
