The oil leakage when you loosened cover is because the output shaft has an oil passageway that feeds lubricant to a bearing on the very outboard end of the shaft. Thus the cover has an oil sealing gasket too. If you lay bike on it's side you can remove the cover for servicing without much oil loss. TWs are somewhat unique in that removing the left side cover for any reason often necessitates also servicing the bearing, seals and gasket.
As far as the engine dying and loss of power I can only guess. Possible ignition related? CDI?