engine leaks

I would say its leaking at the cylinder/head gasket in red. The yellow arrow shows a bolt that can come loose and cause a leak. On these bikes don't over torque the 6mm bolts anywhere on engine. You will blow out the threads. You must use proper torque specs....be carful with sparkplug threads.

Koolaid Kid is right about that. The head gasket is pretty cheap, but the time and effort to do it isn't if you have a shop do it.

I replaced my head gasket on my rebuild, but I was tearing down the engine anyway.

You will need to pull your engine, which sucks, but if you are even somewhat mechanically inclined and have a quality repair manual and a whole lot of time, you can do it yourself.

4TheKZ1000 is right too. Be careful with those engine bolts. If you don't have a torque wrench yet, get one for this job.

I personally would suggest you do it yourself. Not just because it is soooo much cheaper, but also for the experience of working on your own bike. Just have the right tools/equipment ready, and keep all those bolts and nuts organized.

Good luck, and make sure if you do take on this gasket job, the guys on this site are really helpful and know their stuff.

gwolever, does he have to pull the engine? I am not familiar with that particular model, but I was able to install the head on my GPz with the engine in the frame. It was a PITA, but I was able to do it.
AFA doing it yourself, you are correct on the experience. Plus it provides the opportunity for tool acquisition. I rationalize that if I spend half what I would have paid a shop on tools, in the end I have both the experience and the additional tools, both of which stay around forever.

I would say it all depends on how mechanically inclined you are. Ive seen some people who shouldnt touch there bikes with a ten foot pole lol. But the experince is good. i wouldnt think you should have to pull the motor. Ive took my head on and off on my 1000 quite a few times over the years. Also in the first picture it almost looks like your cam end cap on the valve cover maybe be leaking slightly also.