I dont understand how the oil level sight glass could not be working correctly? The only way that you can get a bad reading is if the unit is not setting level. A picture would be great!
By that picture the oil level is low. I believe it should be just about even with the center of red dot min. And top of dot max. There is something goofy about that top hole, almost looks like its pluged up but may just be some oil in it. I think that I would take it apart and check it out. If that top hole is pluged that may be your problem.Do you have the crankcase vent installed in the oil fill hole??
I have a new one if you want it, just pm me.. The biggest problem is the way the rubber front cover gasket is cut.. I modified mine with a cut out to the bottom of the oil indicator..That way I don't overfill as the unmodified gasket covers about half the indicator..