Generally, foam filters can be cleaned with mild solvent (or soap and water and dried completely) and then lightly coated with motor oil.. if you can squeeze any oil out it's got way too much oil on it. Too much oil will hurt air flow. The oil coating just grabs and holds tiny dust particles. Roll it around on a paper towel to remove excess oil.
The filter element should completely fill it's air box and not allow air to get past the edge of the filter element and the box. If it shrunk it's probably time for a new one.