It's gotta be either a cracked block, bad head, or bad cylinder liner fit, I suppose. Do you have a manual for the engine? That should show whether or not it has O-rings. Alternately, have you called either Tommy at Affordable or Ronald at RanchHand to get some guidance? Those guys are the tops for information on these things.
The back pressure thing makes me think the issue involves either the liners or the head since obviously combustion gasses are getting where they aren't intended to go and pressurizing the lower end.