May not be the cylinder gasket then.
Have you tried a compression test on the cylinders.
All the cylinders should be roughly the same compression, a deviation of more than 1 bar (or 15 PSI) will indicate a problem.
When you do the test make sure you take out all the spark plugs (this will save overloading the starter motor) and the throttle is fully open. Note down the readings and let us know.
You are best off trying to get a new block. If all else fails then try the welding option.
I had a liner put an a-series engine and it only lasted 20 mins before it lifted the cylinder head of the block. After all that hassle I ended up getting a new block anyway. (This was a race engine as opposed to a normal road engine)
Wow, that has got to be the highest reving twin spark in the world!!
You may find that the original cable routing has been mucked about with, especially with the engine being taken out. Clutch cables tend to need a lot of force to get moving and when the clutch is depressed it initially tries to straighten the cable.
So if the throttle and/or clutch cable has been moved it may be interferring with one of the others.