Your engine should run on air but the bearing will need lubrication, try thick oil. Castor oil should be heavy enough. Compared with oscillators there is no way for the condensate or oil to relieve itself from the cylinders (oscillators just lift off the port face). Watch out for hydraulic locking.
Have you got the port timing right?
If you have no steam oil get some kidney fat (suet) from the butcher or better still have your wife get a pork shoulder roast and render the fat, enjoy the crackling. Animal fat seems to work better than mineral oils and is a vital component in compounded steam oils.
BTW, I run my engines in by hooking the electric drill to them and running until the battery is flat.
How much allowance for expansion did you design in mate?
Er, allowance? I just made it to the specs although I did use cast iron rather than aluminium for the cylinder. I don't think the crankshaft/rotary valve is over-tight as there's some escape of steam at the flywheel end (as expected!) and the pistoncylinder/rod/bracket arrangement seems free enough.
Ian, I'll try some thicker lube - I think it might be a combination of that and condensation. It's well run in - it spent ages on it's side (held in a vice) with the crank in the pillar drill chuck
Thinking about it, the temporary copper pipe connecting it to the boiler is rather long... I'll bend it around underneath and send it through the flame, maybe that'll cut down the condensation ;D