What I am about to share could be the reason why the motor refused to build oil pressure. I am rather ashamed that I missed it, the last time I assembled the motor, but hey maybe someone can learn from my mistakes? Grandpa always said I made a "good, bad example."
The KT17II that came in my 782, must have been an early series II (spec24302) as it has no provisions for an external oil filter. This did not cause me too much concern, in retrospect, it should have.
You see the oil pressure relief spring is in (2) different locations. Remember, I used the closure plate from the cub motor on the gen set block. Well that caused the relief spring to bind up, and I believe it held the pressure relief valve in the "open" position. No oil went through the block, to the rods and cam. Just the mains, then out of the relief hole, past the ball bound up in the open position.
I realized this too late.