Anyone had bearing problems with their distributor (3RZ)

[eurasiaoverland]

Doing a full rebuild on my 1996 3RZ-FE. I bought it as a project and only drove it a few hundred kilometres before stripping it right down. I noticed a high pitched whine from somewhere in the engine bay, like the sound of a loud fuel pump. The water pump squeals when turned so I though it was that, but now I see this on my distributor:

See the brown crap coming from the bearing?? There is also a little end play in the distributor drive shaft. I've never seen this from a sealed bearing before... has anyone seen this? I wonder if water has got into the bearing, or if this is oil leaking through from the cylinder head?

The bearing turns perfectly and I'm wondering whether I can run with this??

 

[Kanoe]

Yes. I have seen this oily mark on mine too. No noise though. I was intending to check into it someday but it doesn't seem to be doing any harm and I have had no reason to go there until the next valve adj. There must be an oil seal in there somewhere. I suspect mine might be slowly weeping.

 

[nissanh]

There is an oil seal and pretty sure it is bad. I fixed my 92 corolla's distributor. Bought the bearing on ebay for $9 (NSK, NACHI or SKF ONLY): Don't buy Chinese crap. The seal is also bought from ebay as no parts store sells it. It had Inner D 5 mm X Outer D10 X thickness 6 mm. Check yours. It is easy to get it rebuild. Make sure to have the air gap with a proper gauge (I think I set mine to 0.018 mm). Car runs smooth ever since! I build another one as a backup.