Now to put my attention on getting the valve gear completed and ready to run it on air.  Found that the piston valve rings that I bought were too small.  Instead of trying to find the right size, I decided to makes the rings myself.  After a couple attempts, the results were excellent.  Here they are on the valve. 

I put the new rings in, lubed her up, connected the air hose and - Wa La; She ran on air for the first time!  Super Cooooll!!!!   I video taped the event but it's too big to put here.  So instead I took this picture when she was running (can't see her moving in this photo but she was).

I was so anxious to get her running on air that I forgot to set the valves and the valve gear.  So need I say that it ran, but not too well.  After I spent a couple more days tuning everything, I tried running on air again and this time it needed almost no air at all to start the wheels moving.  Reeeeaaal Smoooooth!   Here's a picture of the valve stem with marks (hard to see) which were used to set the valve gear.  

After checking some things out, I found that the rings in the piston valve had too much blow-by.  I decided to re-machine the piston valves to take beefier rings and then made stronger rings to go with it.  Solved the blow-by problem.  Re-timed the valve gear and then ran it on air again.  With the rings in the main pistons and beefier piston valve rings, the engine ran with very little air pressure.  I also noticed that the engine ran faster on the same amount of air when I moved the cutoff from about 80% to 60%.  It used less air but you don't get that nice strong exhaust sound with the smaller cutoff.