With respect to Greasy on that post, i have to disagree.
I'll explain the mechanics to justify my reasoning.
1) The Flyside seal leak :
In this instance, since your flywheel side opens to the air, you're getting the same symptoms as a generic airleak. Your bike is pulling in air which is leaning out your mixture, causing your bike to run hot ...potentially rev to the moon ... OR, if it's severe enough, your bike won't run at all unless the choke is out. Why? Because you've leaned out the mixture so much that there's not enough gas in the charge for it to burn. When you pull out the choke, you've suddenly given it the amount of gas that makes it run again... you've richened the mixture enough to make it combustable again.
*insertion* I know this goes against what i said the other day about how it's the air that is burning in your engine, not the gas... but you gotta think of the jet numbers as a line... say from 75 to 150. Now, you've got a span of about 10 numbers in there where your bike will run. Say you need a 116 main jet, and that's optimal for you. Your bike will run with +/- 10 points from 116 ( i'm guessing, it may be only +/- 8 ). On the upper end of that scale, you're going to run really rich and foul plugs, and your engine will suffer in performance...boggy, unresponsive, etc. On the lower end of that scale, you're running too lean, and your bike will run AWESOME right up until the point you either blow a hole in your piston or soft / hard seize it (more likely ). OUTSIDE of that range of 10 numbers, your bike won't run at all.... it's either got way too much gas and not enough air, or way too much air and not enough gas. (YES, i realize that i'm using the main jet range as an example, where the idle jet is probably the one we're concerned about in this instance, but i think most people are most familiar with their main jet number as the one they most frequently need to change out, so i used that as the example. )
So, in the case of a bad flyside seal, your bike might be sucking in SO MUCH AIR that it's leaned out the mixture akin to you putting in a jet that's like 20 points too small. In pulling out the clutch, you're overcompensating, bringing it back up into the range where it will run ( but, still not ideally ... you may be running too rich or too lean in that condition while you limp it along. ) It's not a situation you want it to stay in long term.
2) Clutchside oil seal leak :
Realize the very different nature of the clutchside versus the flyside on vespa and lambretta engines. The Flyside keeps the air from leaking into the sealed off crankshaft area. The Clutchside opens to the inside of the engine case, where it's full of case oil. The same suction / leaking principles apply, but in this instance now you have case oil getting sucked up into the gas / air mix. That's not good, as it burns about as good as a wet cigar.... and why should it? It's not supposed to ever burn! So, you'll start pulling the engine case oil into your top end, where it's burnt (poorly) and you'll get white smoke pouring out of the exhaust. Don't confuse this with the smoke that comes out of your engine after it's flooded and finally kicks over... this is like James Bond smokescreen kinda white. It hangs in the air and doesn't dissipate the same as the 2stroke smoke.
So, that's no good, as you're losing power. Your bike won't idle properly. Frequently you'll try to combat this by turning your idle screw all the way in, and setting your base idle setting really far open, relying on a huge influx of air to lean out the mixture enough to keep it running. If you try to drive it, apart from fogging out all the mosquitoes on the street, it will run like an absolute dog...slow, nonreactive, boggy, etc. That said, pulling your choke out, as was asked earlier, will NOT make this situation any better, as all you're doing is further richening the mixture... making it more likely the bike will just stall out from too much fuel.
At the same time all that thick case oil is getting sucked into your gas / air mix in the top end, your gas is also spurting into your engine cases. In there, it proceeds to thin out your remaining case oil, and basically ruin it as a lubricant. So, you're rear axle bearing and all your engine innards are now being lubricated by a shitty gasoline mix that's rapidly becoming MORE gasoline and LESS case oil. If you rode like this, you might lock up the rear bearing on your axle... which, if you survive the inherent crash, will absolutely ruin your engine cases in the process.
This aspect DOES give us a nice way of diagnosing a bad clutchside seal, though - drain the oil. Is it thin? Does it smell like gas? Is there a TON of it ( pouring out like water! )? Then you've got a bad clutchside seal, friend.
Hope all this helps.
-Eric