How long did this motor sit before firing? What break in proceedure did you do? It doesn't look that bad. I do have a question about what oil you're using. I'm gonna start a fire storm here (which usually is a good thing for the builder). I prefer not to use Paraphenolic oils ever, especially on break-in runs. I like the rings to heat sink for a half an hour after shut down. And I always am concerned about the rings collapsing if they sat too long on the crate before purchasing the unit. Was this an "M" motor or a reproduction unit built by a person and maybe sat a while before you bought it? Valve guide on that cylinder could have a problem. More than likely, A ring in that cylinder is not sealing (oil control or a compression ring). Give us a bit more info on your build so we can look at it from a different perspective.