Thanks again Mark for your comments.

Surprisingly the bike was running quite cleanly. However, i only managed to ride it once after purchasing. I'm fairly sure the motor was dormant at a japanese wrecker for some time. The rear cylinder was down on compression (around 110psi) vs 130 on the front, and i could see some evidence of a prior seizure on the front cylinder through the exhaust port, so i decided to pull it down. That was 12 months ago, after which i became very unwell and was laid up in bed/hospital for over 6 months. With all that behind me i'm just getting back into it recently - i ordered some rebuild gear from tyga and threw it back together last week.

Thinking about the seal itself - i couldn't help but think of reasons as to why the bike may run well but the leak test go so miserably. Is it possible that the seal softens a little at operating temperature and improves its effectiveness? Or perhaps if a an area of the seal cross section was missing, thus allowing ample transfer of air during a leak test, perhaps at operatimg rpm the seal effectively becomes a solid disc and prevents most of the cross flow (like a spoked wheel in a crosswind).

At any rate i know I've got to pull it all down and inspect, I'm just trying to be certain that I absolutely need to given the bike was running decently. Of course that is no guarantee that the seal wouldn't deteriorate further and cause more damage down the track.

Thanks again for your thoughts.