engine wont rev out

I've been thinking that the engine on my sons bike just needed to be broken in but we're now on the fourth tank of gas and it just doesnt seem to reach full rpm's when under load (riding). It revs up good at a stand still though. Its a 49cc slant head kit from BGF and compared to the engine on my bike his is 5-6 mph slower and need far more time to get to speed- max is 21 while mine reaches 26 fairly quickly. Upon first start up there was alot of oil coming out of the pipe. Not much now but strange. I will take it off and clean it out today and see if that helps. His kit came with a 41 tooth sproket so by all rights (engine specs show more power than mine, regular head) he should be faster than me. I just put a 44 tooth sproket on his (now we have the same rear sproket) thinking the power to weight ratio must be off and that wasnt letting the engine "rev up". The larger sproket helped with acceleration, a little, but no higher rpm's out of it. Any idea's as to what the problem is? Maybe the engine is just slower than mine. It is upsetting him that I can pull away from him so quickly, I will putting a sbp chamber on it soon and I'm sure that will help but out of the box his engine should've been more powerful.

Both have the ngk plug, good spark plug wire etc, basically the same except his carb is different having no intake manifold and slightly different case, and of course the slant head. I have both engines tuned pretty good- nice tan color on the plug. Any suggestions would be appreciated.

I noticed today that there is a small head leak. Looking at the back side of the engine at the head gasket I could see fuel bubbling/vibrating! I'm surprised it runs this way. I retorqued the head bolts which were a touch loose, maybe by a pound or two, back to 120in pounds. It seems to have gone away and he did pick up about 2mph. I am waiting for the new head gaskets arrive and then I will take his engine off (have to remove engine to get the head off, very tight fit in this frame) and sand down the mating surfaces to ensure no leaks. Also might try taking a little extra off to boost the compression. I have been reading about milling down the head a bit to boost compression but no where have i seen anyone say what if anything they gained from it. I see taking the ring all the way down pretty much eleminated the squish (I dont know what exactly the "squish" area is but it must be there for a reason) and I'm not sure I want go that far. I'm also concerned about increasing the engine temp to much. I'm in Az and it will be 115 again before you know it!

I will try that- getting the fuel a little richer. I have E clip on the needle on the second from the top because at first the plug was a bit oily. We did a test on it yestarday and it seemed good. Went about .4 miles wot and shut it down while at full throttle waited for it to cool and got a nice tan color. Once I do the head sanding and new gasket I will recheck it. Riding with it today though side by side we would hit the same speed and you could hear our engines in perfect harmony, he was toped out and mine would pull some more rpms. Simply not getting the same rpm's. I have to say it does run pretty good and I realize there is no such thing as two engines being the same. I was just under the impression that the slant head would be better power wise. We'll see what happens tomorrow! All I know is I really enjoy working on them. I am so hooked, I made a new intake for my bike just for something to do. Its ready to put on tomorrow too.

Well I got into the engine today and the head gasket was definately leaking. I'm surprised at the build up on the head and piston after only 4 tanks of fuel. With this kind of buildup i would think the plug would be oily but its a nice tan color-no discoloration at all. I just got the mating surfaces smooth and went to put everything back together and the lower piston ring broke! I dont know if it was something i did or if it was already cracked. I also managed to loose one of the "G" clips and I'm having trouble finding someone who has both the rings and the clips to avoid a double shipping charge, I'm waiting for a response from Spooky tooth to see if they'll sell me the clips and rings with out buying the whole piston kit. Needless to say my son is pretty upset, no riding this week. I also noticed that the on the intake side of the carb the opening is extemely small. Its a huasheng (I think thats it) carb, no intake manifold, it bolts directly to the head. I thought about maybe trying a different carb if the new seals dont boost power. Only problem is the tight fit in the frame. I would need an offset intake for sure. Well hopefully by the weekend I'll have it running and see what happens.
These pics are what the head looked like after removing it from the cylinder.