Many thanks for the replies guys.
I just got back from some sailing out and about.

Hmm, removing the flywheel is about the last thing I am keen to do. It is also the only thing I have not done. Thinking about it it does seem possible that the crank seal could be at fault. Not long after getting her running I stupidly forgot to check the oil level and the next time I fired her up a whole lot of oil came out with the cooling air. Yes I had fuel leaking out of the return pipes and it had filled up the sump right up to the filler cap!!! had to mop out the oil mix in the fan housing and then degrease all. I replaced the leak off piping. Can't see any oil in the fan housing now though but that crank seal is a likely culprit, though I would have thought that the cylinders would be more covered in oil than they are. It appears to be only at the top of the cylinders!
I did wonder If it could be the oil seals in the exhaust valve guides. The amount that comes out is only a few spatters and only every ten minutes or so but does increase as the engine heats up.

May be Im clutching at straws but the idea of pulling the flywheel and fan etc means lifting up the engine and all that that entails in a boat. 

Engines are great when you need em, but the wind is free and cleaner!

Hi there It's me the one with the Lister SRM3 which I have in my sail boat and I was sold the wrong sized pistons last year. 
The latest update is the engine is working well though I have had some overheating due to the louvres in the cooling air outlet of the engine box. I have since removed them and so far the engine has not overheated again.  However I have some oil spatter coming out with the cooling air, ( makes a bit of a mess on the Teak flooring). Thought at first it was coming down the head fixing studs that also hold down the rockers, so I resealed the thin gasket beneath each rocker assembly. Thought the leak was solved but no such luck!  Am running out of ideas. There seems to be small drops of oil collecting on the top of the cooling fins and this is being picked up as the cooling air exits. Could I have got the gasket and shims the wrong way round? Though I can not see how oil could come out of the top of the cylinders. Could I have a cracked cylinder/cylinders or head/heads. Has anyone out there experienced this problem and worked out why.

 Am beginning to feel really angry when I think that It is almost a year I have been staring at my engine wondering why it wont start, looking every where else for a problem. It is now nearly the olympics and I live in weymouth so was at least hoping to be able to mingle afloat during the events.  Sent mr "Realdiesels" some photos of the state of the pistons and a photo of ring gap and he said they were not the pistons that he supplied. He even suggested that they had been incorrectly fitted and that I did not know what I was doing. I may not be an expert but have done a few engines in my life. The pistons are very black and much sludge has collected around the con rods and is splattered around the crank case[/Users/nick_cirrus/Pictures/iPhoto Library/Modified/2012/Jul 10, 2012/IMG_0433.jpg][/img]/Users/nick_cirrus/Pictures/iPhoto Library/Modified/2012/Jul 10, 2012/IMG_0435.jpgGotta go in there and clean up. That will be twice I have changed the oil. After trying to check timing and pumps I ended up with a fair bit of fuel in the oil. This time it is just plain filthy. All my attempts to start with oil in the manifold have resulted in a very black mess.  Guess I should be positive as he has said to send all pistons and cylinders back to him uncleaned. I have this image of some little Indian lad on piece work pay, with trays of different sized rings on the finishing line and he has run out of +.020 rings so he pops on .000. No one will notice!

If I wasn't such a laid back person I would be suing  the pants off my supplier and busting a blood vessel along the way.

   Well well well, Removed heads and cylinders and popped off a ring from each piston and inserted into cylinders.  The gap is big enough to drive a bus through!!!!  Best part of an 1/8"   Indian quality control!!!!

Pistons smeared all over with black carbon and much sludge on the con rods.  All that cranking has just pushed the fuel oil past the pistons and into crank case. No wonder It would not fire.

So I have spent countless hours looking for a problem elsewhere when all the time it was the new parts that are wrong. Going to check the bore diameters and piston skirt/cylinder  clearance tomorrow with my engineer friend.

Seems I have learnt a salutary lesson.  Just because parts are new and come in a box does not mean they are the right spec! Next time I will check the ring gaps first not last.

Hope mr "realdiesels" will re supply at no cost.

Once more unto the breach as they say.  Starting to feel very pissed off when I think how many hours I have spent looking inside or thinking it through in my head not to mention It has been nearly 8 months since I bust the con rod.

Do not recall seeing a maker's mark, just a number on the top of the piston which I think was either 002 or 020. Wondering if the second hand cylinders have not been cut to size correctly.

I hope I get some positive response from the guy who sold me all the stuff. Guess I would like him to sort it out for me at no cost. The thought of stripping down again does not exactly inspire me.  Think I will leave con rods connected and just pull the pots off and pull out gudgeon pins to release pistons. Bit fiddly to replace but have done so in the past with a friend and fingers!

Hey Ho...

Dont have the cups on the manifold but have undone the blanking plugs and poured oil in with a small funnel to the same effect, though through the breather pipe sounds better. All the piston rings were staggered and oiled etc. What I did not do is check the gap on the rings when inserted into cylinder. The new pistons came with rings fitted and I was not keen to take them off. Since Realdiesels supplied the  re cut cylinders as well as the pistons I assume they were oversized the .002 inches correctly.  Went through the valve sequence yesterday using a screwdriver to observe TDC and valves opening and closing and can see nothing wrong there.
Interestingly when I did the bump clearance I found I had to remove shims in the heads to obtain the correct clearance with the new pistons.  Frankly I think I am done looking at it anymore and going to reassemble today and try again.  One thing i did not try is easy start. Did buy a tin but It had no nozzle so It was nearly impossible to spray. Don't like the stuff 'cos it fires too early and makes a nasty clunking sound in the engine. Am getting desperate now so will have to go back to shop and get the nozzle. May be that will be enough to get her running. Any other ways to help her start?  Oxygen? Nitro? Am out of ideas now just have to hope!
Thanks.

Guess I'm not so dumb after all.  Sadly the rotation is correct with the hand book, which is clockwise looking at the flywheel end for multi cyl engines. Had me looking less glum for the day but just checked. The wires wont reach the other way round! And of course flywheel rotation was correct. Apart from the flywheel markings anomaly  I can think of nothing else to look at. Think I might as well put the gear train cover back on, go through the timing again. With the injectors out I can use a thin screwdriver to check TDC and also observe the valve timing etc. Noticed diesel squirting out of injector pipes as I cranked her round this afternoon, so that is good. The only thing I cannot check is the compression. I do not have the tools and not sure if it's possible  to do that on these engines. However it feels no different from before when I turn her round with a pipe wrench on the camshaft extension. The cylinders were 2nd hand and re-cut to take oversize pistons by the guy that sold me the pistons. One would hope they mach up!

 :)Could be a eureka moment coming guys! Whilst I reckon the indian stuff I put in is reasonable, their stuff must make their gen sets work, and 'lord knows, there's probably quite a few over there, I can't help wishing I had bought genuine Lister parts. But hey the starter motor may well be an issue! I had to lift the engine up some 10 inches into the cockpit just so as I could access it all without having to chop my legs off! That meant I had to disconnect the starter motor. No crank by the way. It may just be I have connected it back up with the wrong polarity and it now turns the engine the other way round. Mind you, not sure if a DC starter motor can be turned the other way just by putting the wires on the wrong way round but it is worth a check. And I will then take a running jump at myself if you are right. Really hope you are.