First, some history.  The bike has a Rex Speedshop electronic ignition / 12v conversion.  The piston is 1st oversize (85.25).  Piston and bore are in good shape.  I split/re-built the engine with all new seals last year.  I have been right through the bike, cleaning the carb / fitting new mikuni parts etc etc.  However, when riding, the bike bucks/farts when holding a constant throttle or decelerating.  With full throttle, with the engine under load, the bike accelerates really well.  The bike runs best with the clip on the needle in the 3rd position (from memory, 4th is standard) and the air mixture screw only half a turn out.
I've done about 50 miles on the bike since putting it all back together, but not happy with the way it runs.  I've been tearing my hair out trying to figure out what is wrong with it.
I took out the spark plug the other day and noticed it was black/oily.  So, I took the head/barrel off to investigate further.  The compression chamber (ie, top of the piston and underside of cylinder head) was black/oily.  I also noticed there is oil (looks like gearbox oil) sitting under the piston - in the bottom of the crankcase.  Amazingly, I never noticed any excessive smoke coming out of the exhaust. (Edit update: I can see that 2 stroke oil isn't leaking through the carburettor into the crankcase as the carburettor has been hanging in mid air for a week and there is nothing dripping out of it).
I have now cleaned out the oil and re-fitted the barrel / head and in the next couple of days, I will be performing a leak test (is 6psi ok as a test pressure?).  I never did a leak test when I re-built the engine, but have now bought some test equipment to try and diagnose the problem.  I'm guessing the leak test will fail and then I will have to test to see if it's the R/H crankshaft seal (soapy water spray) that is the problem.  Could it have popped out?  Do they do that on this model?
Or..............., could the problem be that the o-ring (the one that is supplied with the crankshaft seals) has been fitted incorrectly???
Would that cause the above problem?  I seem to remember that when I fitted the o-ring that I wasn't 100% convinced that I had fitted it correctly.
I have looked online and can't find any info/photos/videos on how that o-ring should fit.  Does anyone have any info/photos/video for the correct fitting?
Any guidance/info greatly received.
Many thanks...

Did you use the genuine Yamaha crank seals and o ring? I recently did a leak down on an R5 Yamaha and it revealed leaking crank seals. I used 5psi. I kind of knew the RH seal was faulty the right exhaust was smoking out the Village as 325 would say.

Hi thanks for the info, yes - I used genuine Yamaha seals and O-ring.
That’s the strange thing - mine doesn’t smoke, but there is oil in the bottom of the crankcase and everything is black inside the compression chamber.
I guess all will be revealed when I open her up again…..
 

They say you can install the seals dry but I always use Yamabond (just a little) around the OD and use a bit of grease between the ID and rotating parts.

Can you tell if it's the trans oil that's in the crankcase? Is your injector set correctly?

Perform the leakdown before any disassembly. You will hear the hissing. Make sure your leak down fittings are secure and not leaking.

Thanks for your help, yes - the leakdown test is my next job. Hopefully will do it tomorrow if the part I’m waiting on arrives, otherwise it’s probably Monday.
I did check the oil pump output last year and it seemed well within tolerance. The oil in the bottom of the crankcase is brown and I’m sure my 2-stroke oil is green? (Yamalube, from memory?).
My thoughts at the moment are with the o-ring. What is the purpose of it? There doesn’t seem to be much info about it’s correct fitting (It’s probably obvious to most people). Hopefully, all will be clear when I strip it down again…

Oil in crankcase:
youtube.com/shorts/IwYR34irwD8?feature=share

Black piston/cylinder head:
youtube.com/shorts/thT4-gcJWxc?feature=share

The o ring makes a seal between the crankshaft and the primary drive gear. Without it you would have an oil and air leak.

Cheers

I'll go & read, but seeing the bucking etc written at the start & mixture screw only half a turn out i wonder if it needs a much bigger pilot jet to send more fuel through the compensating hole at partial throttle.
Ok i'm a page behind so ignore this & i've prob said it before.

Has the piston done quite some miles as sort of looks that way with carbon & blow by. So how are the rings & the bore. Did you first over it or was it already done. Is the head painted black inside with how they paint the outside & making it look worse than it really is.
Is the oil in the case a real problem or just residue from the last run now the fuel has evaporated--ok maybe not.
I hate to mention exhaust but if its restricted & you need to use more throttle so more fuel to try & get speed then maybe more left behind in the case. Ok that doesn't really add up.
I wonder if it's quite normal the oil you're finding [just trying to make you feel better].
But to make you feel worse, sorry, my mate had an RT1 piston port motor he pressurized & it all oozed out between the cast in original liner & the fins. Up the studs & everywhere, So gave up & ignored it, wished he'd not checked it. Probably pressured it too high until something showed up.
I don't think that's relative to your problem though--if you really do have a problem.