The timing belt covers warp all the time and sometimes they will warp bad enough that the timing belt, or tensioner pulley, or crank pulley will rub on it and can rub a hole all the way through.
If it was oily on the front of the engine, behind the timing belt cover, it is probably the cam and/or crank seal leaking (again, fairly common). You have to remove the cam or crank pulley, to replace these seals.