Well I've skimmed across all the posts so far , "all good things mentioned, and I don't think I read anyone mentioning that you might want to MAKE SURE THE RADIATOR CAP IS GOOD or it won't hold pressure, also it needs to be RATED 16LBS OR HIGHER with an aluminum radiator. And the first and biggest thing here is that you got 58CC OPEN CHAMBERS with I don't know what piston and with TINY 262 CAM. Do us all a favor DO A CRANKIMG COMPRESSION TEST and report back. Make sure it's fully warmed ,up carb wide open. My j heads are 59cc, 9.99 .1 compression WITH QUENCH and I can't run more than 28 total under any load or it will ping like a hammer and I also run an 8 blade water pump and 1 row aluminum radiator with 19" fan and no shroud. I would like to know more about this motor of yours because it sounds like it was a blindfolded decision to mill the heads based on assumption of pistons, perhaps... and the 262 is capturing a ton cyl pressure... it be cranking 190psi.