Pulled Alternator Cover and 2 Quarts of Oil Pour Out

jmd_forest

Bldg 1980 XS400 Cafe Bike
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I'm trying to dynamically time my bike and I follow instructions to pull the alternator cover to access the timing marks with a strobe light. As I loosen the bolts holding the cover on, around 2 quarts of oil pour out. I just picked up this bike and cleaned the carbs and got it running. Even though I'm a pretty decent shade tree mechanic, I'm not really familiar with the XS400. The online manual from this site doesn't mention anything about oil under the alternator cover. Please, please, please tell me theres supposed to be oil in there?
A picture of the event is provided below:
 

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Short answer- yes, there is supposed to be oil in there. If the bike is on the side stand, a lot will pour out.

If it is on the center stand, some will drip out, but if more than a few table spoons (maybe a half cup) comes out, there was too much in there.
 
I wondered the same thing the first time i pulled mine off to time it after my rebuild. If you actually take one of the screws that holds the cover on and put it in the hole where the oil comes out it will stop most of the flow coming out even though it doesnt fit perfectly.
 
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