Small Engines (Lawn Mowers, etc.)/toro push mower
how to remedy gasoline in oil resevoir
The engine is flooding or the spark plug is fouled and not burning all the fuel, allowing the excess gas to seep into the oil reservoir via the piston cylinder. Cleaning or changing the spark plug and doing a carburetor adjustment will help. Difficult to diagnose here in this text only type forum. However, you have described it very well.
Regarding the fuel getting into the oil, is there a fuel pump? If so, be sure it is turning off when the ignition is turned off. May also have a vacuum operated fuel shutoff valve.
If the carb is a diaphragm pump type, it may have a fuel return line. A restriction in this line could cause fuel pressure to build up, then dump into the engine after shutdown. The return line may be all or part of the problem.
If the fuel is gravity feed, the carb may appear to have a good needle and seat, yet it may not be closing fully. It's also possible the needle and or seat are damage or blocked do to debris in the carbs fuel bowl.
Also inspect the breather vent. Be sure it too is clear and operating correctly.
I have covered several items and fuel delivery systems that may not apply to your specific machine for the benefit of others whom also may read this posting.