Thanks for all the replies! It really helps a lot. Here's what I found yesterday :
The mechanic removed the LH spark plug and put his hand where the plug goes in and did a couple of kicks and told me that there is not enough compression inside the cylinder. As I said the engine is spilling oil, the mechanic removed the head and cylinder block to find that the cylinder packings were worn out due to heavy compression inside the engine. As we looked at the piston, we found out that the piston was broken and the mechanic told this is what allowed the compressed air to get inside the engine thus breaking apart the packings and spilling oil outside.
I'm not sure if the piston was broken when it was hitting that old 150's head but I can see it has also hit the 180's head as well but I haven't noticed any hitting sound when the engine ran for 15 minutes. It sounded as smooth as the stock 200.
Here's the broke piston's pics to help you better understand my progress :
Note : By broke, I mean there were 2 rings like stuff on the piston which were broken off from the piston as you can see in the 4th pic.




As you can see, the carves are made only on the left side of the piston. Why not on the right? Is it because of the grinded 200's connecting rod with improper finishing?
Now I have 2 options.
1. Ditch all the new 180 head and 200 piston and 200 crank rod and rebore my old 150 head and go with the stock setup. Estimated expense : 3-4k rupees
2. Buy new 200 piston but this time put 2-3 packings on the cylinder block and 2 head gaskets so the piston doesn't hit the head. Estimated expense : 2k rupees
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I've to also mention that the valves are not hitting the piston. The piston hits only the left side of the head.




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