The only thing I can think of is to ask if you sanded the cylinder bore with 400 sandpaper as Frank Bowman suggests? This gives the ring something to "bite" into to break in and seal well to the cylinder wall. Other than that, just keep running it. It takes some time to break in.

In addition to gutting the muffler, you need to provide a larger outlet as well. This helps a lot.

AV8TOR