Re: 89 Force125 Transfer port
Any water that gets into the exhaust chest can blow back into the cylinders. If it then works its way back into the bypass ports, it will get into the block and thus can work its way out the carbs as milky fuel. This needs to be addressed immediately because it will rust all the bearings and crank surfaces, basically ruining your rebuild. The first thing you need to do is generously spray the inside (through the carbs--fogging) with a water removing oil and work it to protect the hardened steel internal parts.
At this point since you did a rebuild and most likely replaced the head gasket, the most likely suspect for water leakage into cylinders is from the exhaust cover. When you replaced the stainless plate, did you sandwich it between two identical gaskets? Did you clean all the old gasket off the block? Did you examine the block to see if there were any nicks or chips on the inside walls of the exhaust chest at the gasket seating surface? Did you look for perforations inside the exhaust chest?
However, if you did not replace the head gasket and/or did not torque it to the correct values, this needs checking also. Note that after running a rebuilt engine with a new head gasket, the head bolts must be re-torqued to the correct value. The heat of initial running compresses the gasked some and you will be able to get almost another 1/4 turn to reach the 225 inch pounds again.