Hi!
Are you sure you haven't run it too lean..?
You should use 5-15% nitro, 20% oil and a OS 8 or Enya 3 glow plug and a APC, RAM or Graupner 8x6 or 9x4 prop.
The axial (back and forth) play in the axle is normal because it's a plain bushing engine (no ball bearings).
Check all screws and tighten if necessary. if things still doesn't work out it could be the connecting rod that is bent...or that the piston to liner fit is bad (worn ).
The cylinder liner can't be warped...just worn out.