Another more common cause is that the seal was offset because of exposure to contaminants – or, in other words, so much debris got packed in and around the outside of the face seal that it displaced the seal. This process begins with damage to the o-ring until it is weakened to the point that it no longer forces the seal faces together tightly. The o-ring shown here was damaged to the point that it looks shredded.  This is obviously not good.   Once that happens, debris gets in between the seal faces and things simply get worse form there. The contaminants begin to mix with the gear oil (that hasn't leak out) and form a damaging sludge.