Gordon,
I am presently rebuilding my Snow engine also. Previously I had made a number of changes to my engine and had it running quite well and slowly. Combustion had improved to the point where the exhaust was dry. It was burning the oil in the fuel to the point where it was creating blue smoke. To control the smoke level I was trying different oils and began cutting back the oil in the fuel. Unfortunately, I went too far and seized it up scoring the rings and cylinders. So I have refinished the cylinders .003" larger with new pistons and a few other changes. It is just about finished but I still have a few issues to resolve. That said, I have never had any problems with the original Buna N seals leaking and my engine had a fair number of hours on it. The first thought I had is that you might have your seals installed backwards. When installed as designed, with the lips facing the combustion chamber, the lips should grip the shaft tighter as cylinder pressure increases.
I have never built a good compression tester, but my engine always had good flywheel bounce back when hand spinning it. One thing I sadly discovered when I completely disassembled my engine was that it had a lot of cylinder and piston rod corrosion. 12L14 is a great cylinder material on a 4 stroke engine, but only if properly maintained, especially immediately after stopping the engine. My drill rod piston shafts were both badly pitted over a large area, BUT the original seals were not leaking when I seized it.
Jeff