YEP that's where the oil is coming out from..........

I didn't think that was normal......I tried putting a drop of oil in the hole and turned the prop to my surprise oil squirted out.

This means that fuel is getting pushed up through the hole by the piston which would explain why a brand new engine will not run....
I am suspecting a defect in the head casting or porosity as Claude mentioned before.
I have emailed YS Factory and waiting for advice.Will keep you posted.

Thanks to the bloke from Toowoomba....great knowledge mate.

regards