Peugeot are notorious for bad crank seals. Pretty much every single one I've ever owned has had bad crank seals. Some of them even run really really well with bad seals.
I had one a few years ago that drove me crazy, everything was perfect, ran great 35 mph stocker, but it just wouldn't idle. Changed out ignition, carb, set the timing about 20 times.... Finally I got so mad I tore it down and sure enough, pretty much the whole inside of the seal was gone.