This engine sits. Anything that sits will see condensation. If you have a thin spot on the water jacket side of the block, it will pocket, especially in an engine with infrequent use and condensation.
Your bore diameter and skirts check out fine. I'm running .0015"-.002" clearance.
The groove in the piston is an accumulation groove to help seal between the upper and lower compression rings. It acts as a buffer and will only cause any marking on the cylinder walls, due to trapping moisture between use.
No my instructions says it should be the same, it also says so on kb:s homepage.
This is a giant red flag for me. Why;
http://www.kb-silvolite.com/article.php?action=read&A_id=32
I'm running a street engine and the requirements of my engine put the end gap at .030" with the exact same piston.
Those pistons, while being hypers, also have a much higher top ring groove, closer to the heat and they will absolutely need to be file/ gap fitted, so the heat won't close them. The bottom rings are ok to install without additional gap.
The gap that you gave is the exact gap that my 2nd ring has.
My guess is that with every pass, you are building heat from tight ring gaps closing, distorting the already distorted cylinder walls under load and it will only make problems worse, each time the engine is run this way.
What I think the cause of your trouble is;
Shoddy block, bad wall thickness/ abused/ pitted water jackets, causing distortion on the inside of your piston wall caused by... Tight ring gap giving excessive heat/ warp/ pitting/ pocketting to an already stressed block.
They may feel smooth when the engine is out of the car and examined, but I'll bet you that is a different story when it's running.
I think if this engine saw anything, other than drag strip pass use, you would have broken a piston.