It looks like to me the #2 cylinder has bad rings or a bad head on it. Mine looked like that when i took it off except that there wasnt that much oil. And the oil on the sides looks like a bad gasket placment. Doesnt look to me like it got a very good seal. Did you put the head on yourself? Or do you have something to put it on with. I called up 2 buds and had one help me lower the 96lb. head on while the other lined up the gasket. If the engine hasnt been rebuilt before i would have to say the head is leaking. The grooves on the intake valve are prolly non exsistant now. so oil may be coming in from there. hard to say. hmm good luck bud <img src="/forums/images/graemlins/kewl.gif" alt="" />