I have checked for leaks on the ignition (magneto) side. No oil is visible so the bearing seal must be OK.
The air compressor is not worn out.
I removed the cylinder head.
The piston and rings have no visible damage but I see scratches on the cylinder wall. I plan on replacing the piston and cylinder with a TNT cylinder kit (50cc). That should bring the compression up to standard.

I removed the piston from the crank today. In the light it is veryplain to see why the motor would not start. There was simply not enough compresion!! The piston has scratches and the rings are also damaged.

Good that you found the cause Erico ..so much easier as having to do spltting of the engine .. because you will be using the Malossi ECU its no problem replacing the cylinder by a non original too ..these malossi ecu used to come as a kit together with a 70cc cylinder , makes a fast 50cc no problem too ..

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Since mixing would cause oil starvation..which oil should I use for break in of the cylinder/rings?
Standard oil for normal use is semi-synthetic. I have not found any mention of the oil to use during my online searches.

I simply preoil cylinder inside with a bit two stroke oil on the finger , same for piston .
Smokes for the first half minute ,but thats np
just remember not to heat the new cylinder up in the first 50km's ..after that it should be worn in enough to drive it at a good working temperature .. Peugeots like long rides . the longer you drive it it the better the engine seems to run
Make shure the piston goes in the right way the mark on top of the piston needs to face the exhaust port ... if wrong you'll notice the slots on the piston rings run over a port .. when Marking/letter pointed at exhaust these slots dont go over any ports ,but go just past full cylinder walls..its a mistake many times with peugs

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The mark you are referring to is the triangle? I will be certain to center the end gaps of the rings at the pins. These horizontal engines are interesting beasts. Thanks for the advice. It looks as if I will have to make a tool to install the fuel tank sensor as it won't lock by hand. I am still waiting for EasyParts to deliver my cylinder kit

Hi Erico..
Yes , imeant the triangle ...sometimes its a arrow , or with original peugeot kits a letter (a,b,c,d ) ..it is always marked to one side of the piston to indicate the exhaust port side ..

2t Oil is confusing , the manual speaks of ESSO semi synthetic , but ESSO isnt the top grade product it tries to be ..idd prefer a full synthetic like Castrol TTS or Power RS as it seems to be called now .

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OK.
I have the new cylinder and piston installed. Rings centered over the cylinder pins. The TNT is a cast iron cylinder kit. I have not seen any reviews of a member using the kit before.

Now it is a matter of water pump install, clamps on the hoses. Installing the injector rail and the Air and fuel hoses. (I did replace the bad air compressor hose with a new one. ) Coolant for the tank and benzine. I replaced the benzine sensor in the fuel tank (the tool I made from scrap steel worked perfectly) and the fuel pump ( I used a Piaggio pump It is identical to the original Peugeot pump) .

I will calibrate the throttle sensor and prime the fuel pump before attempting to start the Jetforce.

I have a bottle of the Castrol Power RS. I will use that after I use up the semi synthetic oil. The Castrol Power RS says full synthetic on the bottle. From what I read about the lawsuit that Castrol successfully won, It is probably a blend that performs to full synthetic specifications. It seems that there are only five brands of actually 100% synthetic oils in the market for consumers.

I will let you know how it goes.

1600: It started right up and purrs like a kitten with cojones
There is a leak at the fuel inlet hose so I will inspect it and tighten the hose clamp.

Idd say with this cylinder and with the special Malossi ecu your in for a max speed of about 80-85km/h easily

Peugeots can gain a lot of speed not straight out of the cylinder but from the vario/clucth system .
If youre willing to invest in good variable racing deltaclutch , a torque amplifier , and a race vario (all from 1 brand if possible cause they form a system together) you will able to get it a 100km/h in a way it candle handle very fine .

A kevlar reinforced belt is definate a thumbs up for it grips way better over the pouli's as he standard rubber bando belt does ...

A white pressure spring from malossi is a thumbs up also .
The special clutch bell and the ventilvar demi pouli would be the total finishing touch .
(the clutch bell i think is only for aesthetics , the ventilvar demi pulley is not , for its different rounding is completeing the whole racing system...but not necesarily a must )

But especially the torque amplifier pouli half is a very good investment ..

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Houston we have a problem.
I think my thermostat is bad. I would check it but I don't own a digital thermometer.
I was driving the scoot at a reasonable speed ( 27 Km/h) yesterday and about 5 KM from home it stopped. I let it cool down and it ran for a couple of minutes and quit again.
I tore it down again and I see and can feel scratches on the new cylinder and piston. The motor did not seize and there was not a lot of carbon buildup on the piston or in the head. The rings were still lined up on the piston pins when I removed the cylinder.

I ordered another cylinder kit and a thermostat (and circlip).
I will rebuild it again.
There was nice pressure on the compressor. When I removed the hose there was vacuum.

Try number two.