There is a hole in the back of the engine "vee " on the side you describe and it's made like that from the factory. It's there to drain any fluids that happen to leak into the valley. And the reason you have oil coming out is because there's a leaking diesel pump that's in that valley and it's mixing with any oil that may already be on the block. It's also possible that the oil pump or the fuel lines that are also in that valley are leaking. Pressure wash the valley out, dry it out as much as you can with compressed air and rags,then start the engine and with a flashlight, try to see if you can pinpoint the problem.
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