The oiler is a pump driven off the crank. It sucks oil from the oil reservoir through a tube - usually plastic with a metal filter on the end. The oil is then fed directly from the pump to the chain, usually through a drip hole under the bar end near the sprocket. The little holes on the bar end match this oil hole and are there to allow the oil to get to the groove in the bar. If they are blocked the oil just makes a mess around the sprocket, so if you've got lots of oil around the sprocket, but none on the bar, clean the holes out.
You won't be able to get at the oil pump without some serious stripping, so check the oil filter on the tube in the oil reservoir first.
wes, March 2009