PTO cylinder damage

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TowerDog

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787 rebuilt from SES this is the BYO option. Motor sat around for 2 years finally put it in this year. Ran for about 5 hours, looks like rotary valve seals are bad. Had a lot of oil in the cylinders and exhaust. Took a look at the PTO cylinder since it was low on compression test, 0 to be exact and seen the walls and ring are scored. Before I call SES what could be the cause of this ? Running premix 32:1 per SES recommendation. Could this be an issue with the carbs and not getting oil to the cylinder ? The rotary valve seals went bad around 3-4 hours since that the motor was just soaking the plugs. I pulled the motor and filled lines to the rotary valve and they went down over a day or two so I know it's those that were leaking. Motor ran pretty damn good.
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The crank seals shouldn't have gone bad unless you never filled the rotary cavity with oil after going to premix.

Were the carbs rebuilt and fuel system serviced prior to running the new engine?
 
I rebuilt the carbs and fuel lines are all new, pop off tests were good on both carbs when I tested them. I failed to mention I had a line pop off for the rotary valve cavity and it did run dry for about 3 hours, I figured the seals were bad for the rotary valve after running no oil. Does that mean the crank seals are bad too ? Just trying to figure out my next steps and what I need to do. Sucks this was a fresh rebuild and spent some good $$ on it
 
I wouldn't be surprised if the inner crank seals were bad from running it without oil for 3 hours. This could cause and air leak and that would cause the pistons to seize like your picture shows.
 
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