Opening up the oil pan of the motor revealed the most likely reason for the cylinder damage. O-ring on the oil filter inlet was pressed out of its seat. This appears to be a known problem in VMax occurring if the engine is raced when the oil is still under normal operating temperature.
 You should not ignore the power of an oil pressure backed up by 140 hp.


Here is a signifying difference in the extension of the oil filter inlet and outlet pipes.

This guy which appears to a master craftsman solved the problem on the oil filter outlet pipe, http://www.saarloos.net/megasquirt-projects-mainmenu-69/turbo-vmax-mainmenu-83

The rubber grommet on the oil filter outlet should though be enough to keep the pipe in place as it is pressed by the bottom of the oil pan and presses the outlet pipe in to the seat in the engine block but the inlet pipe is free to fall down from its seat.

To attempt a solution I made two rings. Inner diameter 13.9 mm tight fit on the pipe. Outer diameter 18 mm close fit to the seat in the block and the outlet port on the oil pump.


I then pressed them on the pipe in to the o-ring seats.


The ring on the end that goes in to the oil filter inlet does keep the o-ring in its place.


The ring that is on the end of the pipe that goes in to oil pump outlet port presses the o-ring in to the port but at the same time it supports the pipe so its movement is restricted.  


To further support the pipe I will put a rubber ring on it that will press in to the oil pan bottom.