There's no oil in there, so not sure there'd be an oil seal either. Sorry if I've misunderstood.

Done heaps at work, The seal is stopping it coming out. Just turn the plastic worm & force it a little & the seal with steel worm will come away. When you assemble it after greasing just reverse the process & force it a bit but turning--reverse of taking it out--for seal to go back into place. Forget replacing the seal as then ya in trouble, removing arm off the worm. grease it up, she'll be like new. Only trap it to start it on the right spiral so don't force it to get seal home until ya sure. Basically the arm has to be able to operate starting from right back in when right down, in which case would get the steel inner just poking through to the outside where we're looking in your pic. I can see it'd be a bit intimidating if you've not done it before.

23 seal recesses into 27 housing push screw they call it haha--whatever.

www.partzilla.com/catalog/yamaha/motorcycle/1972/at2/clutch

I think it operates just like a worm gear. Trying to push it straight out would probably damage the gear and case. Arguably, I haven’t seen the need to do it myself. As a note I also saw replacements in brass on KDI’s site as well. I’ll defer to others with advice on removal. 

Got it! RT325 was right. Just a little extra oomph while twisting the two parts and off it came. There was lots of grease and grit that was clogging things up. Got it all cleaned out and now it is smooth as glass. I left the old seal since there was no way to get a new one on. Now on to the right side crank seal.

Thanks for the expertise. I don't know what I would do without you.

I'll frame that & show it to my wife--'RT325 was right', haha.

Thanks Morls - I might have a play with my old RD case later, to see if it's the same.

I know that it says oil seal, but what oil is it sealing, or is it maybe to stop stuff going in (ie a dust seal)?!

True, let's call it a grease seal if ya decide to grease it lol. Not sure there's room to revolve the outer bit on an RD but doesn't the worm bit just turn out without bumping into the case. Too long ago for me.