Jim, clean the bores of the cylinders again and again and again with brake cleaner and/or rubbing alcohol and CLEAN lint-free rags or wipes. It is entirely possible that the hone oil is still in the hone marks/grooves. The rags must come up clean with absolutely no dirt on them. I used Total-Seal #2 ring and their Quick-Seat compound on the totally clean and dry cylinder walls.
Did you use valve lapping compound on the cylinder/head seating surface? That is a step I do to ensure a good head seal.
Do you know combustion chamber volume? If the chamber is too big, not enough compression.
Did you check the deck height? If it's too large compression will suffer.
You can use either hi-temp rtv or permatex case sealer for the barrel to case junction.