As one of the first to study and write of liner protrusion problems and solutions, let me chip in.
Original Lister CS engines had no liner and the piston top comes level with the deck.
Listeroids have a liner that sits in the block on an interior 'ledge' machined in the block.
SOME Listeroids have liners that protrude TOO FAR above the block. (Mine was .032").
IF the liner sticks up too far, the head is pulled down like a skull cap over the protruding liner. Headgaskes leak water and soon blow out, usually near the coolant exhaust/exhaust valve area.
The liner is a GOOD thing...and cheap. They're easy to face to proper dimension on auto machine shop equipment.
"Proper protrusion" is said to be .005 to .010 inch. Mine is .003 and working perfectly.
To test for proper protrusion-- Remove the liner by pushing it out from the bottom. A drill press works well.
Remove the O-ring and clean the block and liner REALLY well. Wash, dry, wipe, blow, wipe again.
Put spacers under the bottom of the block and lower the liner into the block. Rotate it and make SURE it's not got a bit of grit stuck on the mating ledges.
Lay a straight edge across the liner and use the feeler gauge to measure the gap between straight-edge and the top of the block in several places. If the spaces are DIFFERENT, it's the perfect excuse to grind it true. Aim for .005 plus or minus .002 and you'll be fine.
Remember this figure. Its' the SAME MEASUREMENT as what the top of the piston will be BELOW the straight edge when the block is assembled and torqued and the piston at TDC.
IF its' out of spec--- Have an auto machine shop grind the proper amount off the top of the liner. It's best done IN THE BLOCK so it'll be parrallel with the top of the block. (don't count on ANYthing being square, just make sure the top is 'flat' so the head seats properly.)
The liner CAN be turned in a lathe with a dummy block to support the bottom chuck support area, but be prepared to chase out of square, out of level and just plain terrible machining surfaces and geometry for a LONG time. Both ends of the block and the bore sometimes have little in common and takes a lot of set-up time to correct. Without the block corrections being done FIRST, the liner is nearly impossible to set up successfully on the lathe.
The SECRET is in the cleaning before measuring. Measure until the readings are the same.