I doubt it is a broken ring. there would be quite much smoke if so. a few questions.... which plug is wet/foul? run smooth? Initial gut feeling is oil is getting diluted by excess fuel caused by excessive fuel pressure, dead-headed injector, cylinder not firing...ect. The fuel could be washing the cylinder wall thus getting past. I would indeed strongly point out the long term effect of such a issue on the critical surfaces and bearings depending on the amount of dilution. If the bike can be rolled out side and allowed to air out then recheck the crankcase oil smell and again determine excessive fuel. i would refrain from starting it. I would want in writing documentation of fuel dilution in oil if the chose to NOT replace engine after determining excessive fuel dilution. Is it possible the fuel tank cap is not tight/venting and your just smelling fumes? when switching on the ignition the pump pressurizes the system for a few sec's thus you could eyeball the fuel line and injectors for external leaks. Id confirm fuel in oil and if so make them pick it up. Have you checked fuel economy?
I didn't check the plugs. It runs smooth, so it appears as if both cylinders are firing. The smell is definitely coming from the crankcase. I can tell because I can smell slight fumes around the bike, but when I unscrew the dipstick, the smell becomes stronger. I also wiped the oil off the dipstick onto my finger and smelled again, definitely fuel. I also checked the fuel cap, it only turns 1/4 turn and is tight.
I have a new bottle of syn3. I dripped some onto the floor and tried to burn it. It did not catch fire. I took some syn3 from my crankcase and put it on the floor. It ignited immediately. That tells me there is fuel in the oil.
I'll have to call the dealer in the morning and have them come get it. Thanks for the input.
Update: I just now remembered that the bike backfired earlier today. Could that have caused something?