Well, we sent it off to an Engine tuner and the feedback is that the Oil Seals which we had believed to be the problem are actually ok and the engine was fine under pressure testing. So thats one out.
However, he discovered there was a spring missing holding on the Exhaust manafold which would cause the power valve to always be open.
Also, he said there was a problem witht he fuel pump, causing air to be let in to the fuel line (i cant check details of this until we pick the engine up, only spoken on the phone) im hoping maybe thats what caused the surge in power.
He also said there were several problems with the carb, two bolts were fully tightened up which shouldnt have been and the flood chamber was filled with crap which im hoping explains why ive had rubbish bottom end performance.