Thanks for the advice, I will be following it (and others) CLOSELY!
The other night(after you posted it) I read it, but it all went over my head. It was late, and I couldnt really think all that hard(well, I seldomly can!

). I havent given it a once over again(yet), but will do. My first priority is to get that engine out the Vanagon and on the workbench/floor in my workshop(still in the making).
I havent sat on my aR$e though. I have searched the net for "coil binding" as well, for some visual aid. I have not really found something that I could say clears the mud though. Any references would be appreciated though(hint-hint).
I have been thinking about this dilema too. And this is what I have come up with. My previous boss machined the case and heads. The heads was done with the "eye measure" tool. So I think he might have machined the #3 too deep. Giving me a wrong deckhight, causing the intake valve to hit the piston. Would this assumption be correct? This is what I found on STF(which I believe confirms my worries):
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Actually Max.. deep flycuts will be the biggest source of rocker geometry corrections. If the heads were stock and the case was stock too, going to 1776cc should not do anthing different..given using stock rods. If you machined the decks of the case and flycut the heads the motor just got shorter. In essence, the push rods got too long and the only way to put the rockers back to baseline is gain some altitude with the rocker posts.
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The first time when it happened, I took the other/old head off, because I thought that the valve was sticking. When the head was off, I didnt notice any marks on the piston though. Although, it was 'carboned up', if that makes sense. For new pistons, it was black with a 'crust'. I found that disturbing, but didnt make anything of it, as I was guided by a pro when putting all together. So it must've been right.......RIGHT? I know better now. If you want it done right, do it yourself - after some proper research, if you dont know how already. I realise that I dont know that much, but I am learning, thanks to you guys :agree:
So i am not going further with this at the moment, before the engine is back on the stand and stripped to bare case(with c/rods, c/shaft, cam shaft etc installed), or should I strip it down completely and start from SCRATCH?(i.e. is there anything else that he might've missed inside that would cause serious problems later?).
PS. I do think I have got the Cam manufacturer wrong, but still think the "110" is correct. I will try and found the packaging/ask me previous employer.