Paul,
Andy had a similar problem on his Striker when he first got it going. It turned out one of the valves had stuck open and then been knocked by the piston. The engine was repairable, but he had to fit a new piston, valve and give the bore a good hone. Hopefully yours is not quite as damaged, I have bought new pistons (in the military box) from XK Engineering in Coventry if you need some bits.
Chris