97 xp rotory valve damage

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Rdessewffy

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Previous owner rebuilt top end and carburetor, but I dont know how long ago. I've never had it in the water since I got it. I did get it running after I put a new starter in it and in driveway ran fine them put on side of house for a while. I pulled the engine because I thought I had a gas tank leak ( still ain't figured that out). Found a lot of things needed attention so I'm glad I pulled engine. One thing scares me.... there was a screw missing from the carbs butterfly and I dont know if it was left out or went into motor.... I found weird grooves and Mark's on the rotory valve and cover. I can also see that previous owner ran it for a while after his top end job because of the marks on cylinders. Everything he took off was put back together way tight. Any little screws on carb were mostly stripped at the Phillips head point and one of the needle valves was broken where flat head would go. Had to spend an hour getting it out.
Anyhow, I'm wondering if anyone can tell by my pictures why the rotary valve and cover look like this. There is a lot of what I think might be carbon build up and grooves. The grooves aren't deep, but on the valve there is a half round black area that is rather deep. It's the same size as the port (?) On the carb side. On the cover where carbs bolt on, I also found one of the bolts wasn't seayed into threads. It's drilled out within half inch of bottom like he was going to thread it and insert a helicoil. Its rough trying to play detective lol. I've looked at several posts before I put this one up and see some similar pics but not exactly same thing. Still scared of the butterfly screw.... engine ran fine out of water so I'm hoping he just left it out..... odd. Thank you all!
 

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The valve is stained like it had water in it but the cover and cases look ok.

Your pistons however are not looking great, what is your compression?
 
I checked compression when I got it a while ago and it was even, but I forget. I'll check again.... thanks.
 
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