There is an oil slinger on the crankshaft behind the crankshaft pulley..
Its like a large flat washer only its slightly concave,
and throws the oil back into the engine...
I have seen on VW accessory websites in the USA that sell a seal that is glued to the special crankshaft pulley..
so You don't have to have the engine case machined to accept a so called sand seal...
the pulleys and seal came as a set, and were fairly expensive...
The VW engine was designed to breathe out crankcase vapours fumes out past the oil slinger...
as some one pointed out, if You were in deep water etc it may be a problem, but the only problem I've heard of is
a slight oil leak , if You park with the front of the car up a very steep incline...
Maybe some of the Baja and Buggy people can tell You what they do with the crankshaft pulley-
if anything...
cheers
Lee
http://community.webshots.com/user/vw68autobug