Kyle
I am going to bet that what you are talking about here is the oil trap inside the air cleaner housing. There is a hose going from the front of the valvle cover to the top of the air cleaner. It attaches to a tube that runs into the air cleaner, and there is an oil trap inside there.
That trap, or whatever it is called, is a sore point with 81 300SD owners, and others as well.
First thing to do is to unbolt the air cleaner, it is held in place with three small bolts. Remove it and I guarentee it is an oily mess.
Clean it up as best you can. Get some good oil cleaner, like a large bottle of Castrol Degreaser and go to work.
The air cleaner assembly has a nipple underneath that should slide into a tube that runs down and into the oil pan. The nipple has an O ring and that O ring is a part that needs to be replaced often on these old diesels. I always pick on up at the local hardware store.
Clean tha tube up same as the air cleaner. By the way, spray the degreaser into the oil trap and rinse it several times.
After you get everything clean then just reassemble with a new air filter. The purpose of all that cleaning to locate the source of all the oil leakage. Keep an eye on it after this and if you find something leaking oil then try to repair it. There is usually enough blow-by on an old diesel to keep that mess well oiled. There have been some recent posts here showing some ways to build another oil trap. Maybe that is the answer.