Composite Flaking?

[Gage]

Looks like a water problem to me as well.
Just curious, you didn't mention if you measured your crank side play with a feeler gauge.
If you didn't or don't remember what it was, now would be a good time to do it.
Also, with the stator cover off, grab on to the fly wheel and see if you can pull it up or down at all.

I didnt do side play but I did try to move it up down before hand and I doesnt budge a bit.

[sandblaster]

I would measure the side play of the rod, not at the piston end but at the crank end of the rod and do it with a feeler gauge.
Checking for any play If you pull up and down or side to side on the fly wheel not the connecting rod you will some times reveal some movement as these bikes are notorious for eating left engine cases where the main bearing fits.
Since you have the top end off it's easy to check and may save you a lot of money in the future.

[Gage]

I forgot to update this. So this might be the stupidest story any of guys have heard. I sure felt stupid after the whole ordeal. So after I took this cylinder and piston off, I took it to a buddies machine shop and some old guy told me an interesting fact. Magnets stick to sleeved cylinders not plated. Well the machine shop that I took this cylinder to be bored out originally apparently did not know this. Well my cylinder was plated, I know that now!... Sad part is I knew these bikes had plated cylinders and ask the man who's a certified expert and owns this shop if it was!!!    Well after weeks of trying to slime his way out of doing the right thing, he agreed to pay for a sleeve and installation as a way to fix my cylinder. Mean while Ive already payed for a new plated cylinder and am ready for round two at putting this thing together this weekend.