If you run the 650 H1 with the primary off it will blow the oil past the seal, it needs the pressure to hold the seal in place.
Sounds like either your shaft is bad or the spacer is missing allowing slack.
2010 Prowler XTZ 1000-
27" Grim Reaper Tires/Home Made Roof/Arctic Cat Mirror/Quadboss Folding Windshield w/ home made support bar/LED Tail-Brake lights//Venom 4000 lb Winch/Amsteel synthetic line/Home Made Doors/Custom Adjustable Seats/Custom Oh Crap bar for passenger/Tonneau Cover/Fat Max storage Box in bed
Tiger Tail Towing system