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I can't tell from my armchair for sure but it sounds to me like the seal wasn't fitted properly in the first place.
One thing that happens on OM61X engines (I know not the same as yours but of same vintage so...) is that the seal wears a lip into a ring that slides over the nose of the crankshaft. If you don't replace this ring along with the seal then you can get leaking with a new seal. If your M110 has a ring like this and it has a lip / ridge then it is possible a clever mechanic purposefully left the seal poking out so the seal runs on another bit.
Just a guess.
(Though more likely it was a bugger to fit and was left in a "good enough" position)
See what it is like when you take it to bits.
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As for crankcase pressure pushing out a seal - I'd expect the rubber part of the seal to fail not for the whole seal to be pushed out as you describe. For that to happen I'd expect to see oil seeping from the outer edge and for it to be a silly loose fit. I don't think it is very likely.
Again - go see.
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