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Sounds like the pressure switch failed on. Its usually mounted on the air tank and the wires for the motor come from through it. Best bet is to just replace it rather than try to clean or repair ir. The oil is coming out because its hot and expanding. Depending on how long the compressor has been running will determine if the pump is shot. Its quite possible the rings are fried and the oil was being pushed out by air leaking into the crank case, but its also possible the air was leaking by because of the increased pressure of the pump.
Good luck.
HG
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