So my Crank seal fail.  It created a short, and brushes wires melted !!!!!!
How would you suggest to clean the stator ?  looks like still some oil deposit left.
Any suggestions?  Thanks.

Lighter fuel or naptha brushed on will do the trick.  DO NOT used denatured alcohol.  It will dissolve the shellac that many of the parts are coated in.

Oil from a leaking seal won't cause a short in my experience but happy to be corrected.
Thinking again i guess its fuel & oil from the crank seal but i dunno, still can't see that causing a short.
i'd be looking elswhere to see what caused the wires to short & why.
Any pics of the melted brush wires.
How was it running until this happened.

Yes you are correct oil and fuel... was quite a lot of it at base of Crankcase cover...    The initial symptom was air leak with very high rev when declutching.  Then loss of power... then unable to start and no spark....

Oh gosh, not sure what to say but good pics thanks. See what others say but test the field coils by disconnecting them & see if they short to earth i guess. Test the armature also which 'i think' should have continuity between segments where the brushes run but zero continuity to earth IE the armature core. I guess a lot as its 50 years since i worked on these at work but of course they were new then so nothing much went wrong. Same generator system as lots of models twins & singles so test procedure would be much the same. See what others come up with.
Are all the wires going to the correct terminals, that green one would have 12 volts direct from the start solenoid going down there.
Bigger screw on that one so only option by the looks. 
Battery not reverse connected--not sure it would cause that issue though.