Re: I am stumped, please help!
Any signs of water on the bottom plug?
"Transfer Port" cover refers to the cover over the intake ports.
Leaking fuel pump diaphragm can flood out one cylinder. Check the back of the pump (where it sees vacuum) for fuel wetting. That's if the pump is integrally mounted to the motor, if it's separately-mounted and connected with vacuum lines, check the line to the block. If it's wet, fuel is being sucked into the crankcase and flooding the cylinder.
Given the powerhead is "new" you'd assume that the lower crank seals are good, however if you run up against the 'brick wall' and can't find any other solution, you may have to pull the powerhead and check the seals out. At least it'll come off easily enough!
Last thought, are you sure it's firing the lower cylinder? Have you checked the spark on #2 with the engine running, either with a 'firing indicator' or by hooking up a timing lite? The spark may be blowing out under pressure. If it's firing with the plug installed you know it's not an ign problem.
Anyway, Most Interesting problem, keep us posted!..........ed
P.S., given that the top cyl's running strong, it's not likely that there's anything wrong with the flywheel installation.