By the looks of the piston and the bore, it has some rubbing issues. Looking at the scorch mark on the piston by the exhaust bridge, the top end has had some extreme heat build up. Also looking at the bore it has been highly polished showing signs of a lot of hours on the top end.
Note the piston has grooves running around the piston near the ring area. Note that you don't see the grooves around the lower part of the piston. This is a sign of piston wear.
Whenever you receive a FL350 Engine you should pull the head and cylinder off and check its condition unless you yourself have witnessed the build and know how many hours are on it.1.) Check the piston to cylinder wall clearance. Should be no more than the .006" service limit.
2.) Check the ring gap. Should be no more than .020" service limit.
3.) Check to make sure the holes have been bored in the piston and the exhaust bridge has been relieved.
I can't count how many times I have been told or have heard from someone else "low hours" or "I just rebuilt it" and the top end is worn out way past it's service limit.
Pull the cylinder and inspect the clearances for peace of mind!
Rand