Oil used in a 2 stroke motor is specially engineered to provide lubrication and to burn. The oil is burned in the combustion chamber.
Lack of oil changes.
you don't mix the oil/gas. you only do that on a 2 stroke engine. that is a 4 stroke. it has a separate reservoir where you put your oil. just put unleaded gas in tank and go.
it may go bad, it is better to replace the oil
Depends on how much oil there is. Running any four-stroke engine with low or no oil is going to cause serious damage. Connecting rods and head parts would most likely go first. Oil acts as a coolant for internal parts as well as a lubricant. Without oil to lubricate, parts will only get hotter, and without oil to cool them, bad, bad things will happen.
Oil in a sealed container does not go bad.
Bad very very bad.... engine will get too much oil and overheat and go boom... lots of smoke...
The engine runs a lot hotter than a four stroke engine, you should only use oil that is made specifically for a two stroke motor other wise you run the risk of catastrophic failure. assuming that you have already done that then the other reason is that in the process of firing and compressing the pistons, there is a stroke that can be referred to as a dirty stroke ( that is why a two stroke has such a gassy smelling exhaust) this stroke is one that lines the walls of the cylinder with a thin film of lubricant (oil / gas mix) to make way for the next stroke, the combustion stroke. Now after the engine has warmed up enough the gas portion of lubricant vaporizes and is ignited and helps with compression of the other piston(s). so that process burns the oil and in turn will make the oil per to say turn black. Two stroke engines should be taken apart and cleaned pretty regularly and proper jets should always be adjusted or replaced under hard use, they do wear out like water running down a river bed.
It could be the cause of the knock only if the gasket was bad and leaked out almost all the oil.
http://wiki.answers.com/Q/If_you_have_no_oil_in_the_engine_would_that_cause_the_7th_cylinder_to_go_bad"
If you are referring to the oil light then you do not reset it. The oil light comes on when it detects low oil pressure. The light will go out when the problem is corrected. Can be the engine is low of oil, does not have sufficient pressure, or the oil pressure sending unit it bad.
Engine sensors will only "go bad" from environmental effects. Lack of oil causes excessive heat. Heat can cause cam sensor failure