What causes this.....slave cylinder leaking

I have a very small oil leak coming from around the front sprocket area......so today I started getting the front sprocket off to clean everything nicely in order to see where the oil was coming from. To get the front sprocket off the clutch slave cylinder needs to come off aswell. I cleaned everything nicely and then I saw that there was some sort of shitty buildup inside the cylinder.....I cleaned it out and realise that in some way something was actually eating away at the circlip that keeps the "piston" from falling out of the cylinder.
Now I'm thinking that the oil leak might be coming from this.......what do you think is the the cause????
And is there supposed to be oil filling up behind the piston when the clutch is pulled?