I concur with Zippy's opinion. If the carb's float needle is stuck open, and the tank is more than about half full, the tank's level is higher than the top of the main jet in the carb. Fuel trickles down the throat into the cylinders and past the rings into the sump. (My car did this quietly over one winter....).

First, clean the carb bowl and the inlet needle and seat. Then reset the float level to spec.  Or rebuild the carb completely.

Now, drain the oil out of the crankcase, leaving it to drain several hours and remove the oil filter. Oil that diluted should pretty much drain away from most galleries, bearings etc. Replace the oil filter with a new one and install fresh oil.

Next, drain and clean the fuel tank. Put it back together and use the electric pump to pump some fresh gas through the fuel lines and pump, catching the outflow in a can for later disposal.

Then reconnect the carb and coax it back to life. Tune it up.

Once you've got it sorted, another oil change would be prudent.

Ok. So correct me if im wrong,  first i should drain the tank, change the fuel filter. anything else to get rid possible gunk in fuel system?

Then change the oil a few times.

What about the carb, I must admit i'm quite unfarmiliar with this not even sure which one i have.

The original problem is likely as Zip indicates; a float needle stuck open causing an overly rich situation. Car doesn't run well and unburned fuel ends up in the oil.

Zippy/ Sure everything in carb at this point is sticky. That's why poster needs to tear down and do a carb rebuild along with getting rid of old gas.

If electric pump is working should make a noise when key is turned on. Also check if it is getting hot if noise is heard.

Edit: Check fuel strainer in tank with the old gas.

Float needle stuck open, choke stuck open, flooded
 

Electric! found it. Wheres the best place to jack this baby up without causing to much of a fuss?

Follow the fuel line back. If a mechanical pump is installed the pump is fairly close to the carb and th line will be short from carb to pump. If electric follow the line beneath the car. After sitting so long, be prepared to pull the tank and remove old gas and clean/rebuild the carb. I recomend to just get a rebuild kit, disassemble  and clean everything in the carb.

Should be obvious. If you don't see it then you have an electric one on the rear subframe.

//www.minimania.com/part/AZX1818/Fuel-Pump-Mechanical-Mini-And-Mini-Cooper-To-1990

Hmm, well what should it be in proximity to? 

Hmmm, I don't know of any other way fuel can get in the engine.

I cant find this mechanical fuel pump you speak of.

I believe Larry meant that the electrical pumps came along later... at least as far as the Mini is concerned.

In addition to checking and replacing the fuel pump, perform a compression test once you get the engine started again and up to temperature.  Unless the crankcase was so filled with fuel that it was oozing out, the oil you saw at the dip stick may indicate really bad blow by.

If you have not started this car in all those years, you can count on the old fuel being gummed up in the tank, any fuel filters, and worst of all... the carb.  Even if you are lucky and manage to get the engine restarted you probably are going to have to clean and readjust the carb to remove the varnish and gum deposits left behind from old fuel.

Mechanical fuel pumps were certainly on early midgets and sprites, and are still available for these engines.  A newly manufactured item will have a different rubber spec and will be OK with modern fuels.

It might have a mechanical fuel pump and the diaphragm has disintegrated. Look on the back of the engine on the left (looking into engine bay). The poor running was fuel starvation. Repalce it. Mechanical fuel pumps are a later innovation so if you have one it is an add on component. Same thing happened to me in a 76 Mini. The oil pressure went to 10psi. There's a danger of a sump explosion.

1960 Morris Mini 850 has fuel in oil pan, and is ozzing out slowly but constantly.

I have owned the Mini for about 6 years now. Out of that six years i've only driven her for about a months time(the first month). Upon purchase she ran like a dream, drove around town 15-30 min trips around four times.  On the fourth time I stopped at a nearby gas station and filled up with mid-grade(my first mistake).  Shortly after she got the flu real bad started sputtering, missing, engine not responding to the gas pedal.  Eventually killing after wating to restart a few times made it home, is when i first noticed the oil coming from the dipstick.  The car has sat in the garage since, and i finnally have the time give to her. 

Today, I dusted off the old girl and took a closer look at some things and i realized how thin the oil was that was leaking out, took a sniff and smelled the fuel.

Where should I start?

 Help.