The area where the oil line connects to the injection pump is lubricated from the engine oil pump. The roller tappets and camshaft/camshaft bearings are lubricated from this oil line. The oil drains out of the front of the injection pump back into the crankcase. The rear of the pump (the governor housing) has it's own separate oil supply. Hence, the filler cap and dip stick. It is supposed to be separated from the front part that is lubricated from engine oil pump. There are o-rings around the outside of the steel tappet liners that keep engine oil from the engine getting into the governor housing. When these o-rings get old, hard, and shrink the ensuing resultant problem is what you are currently experiencing. So yes, it's time for a thorough rebuild. However, the later pumps do not have this set up.
