From personal experience with my dt, chances are if that seal is gone the output shaft bearing may well be partly to blame, (almost certainly if the chain tensioner seizes as it is wont to do) as well having play and possibly some unwanted material in it from the chain.
Well worth checking, hopefully its ok as it needs a complete strip to change.
The DTLC shares quite a lot of parts with the earlier DT175MX, obviously not the frame or tank but things like cables and smaller parts, a good chunk of the engine too. In the Australian/Asian market the DT mx stayed air-cooled long after Europe got the LC, not so many tree huggers out that way?, swap out the right parts and its back to a 175 air-cooled engine.