Norm, The easiest way to find out if is the crankshaft seals is the old pressure/vacuum test of the crankcase on 2 cycles though it may be a gasket problem. Here I use a MityVac 8500 tester for this but I got admit I use it more often to test carburetor needle valves sealing. There also the old soapy water trick but it won't find seals that leak on vacuum pulls.
As for honing cylinders are you using a flex or a rigid hone? A rigid hone tends to true up a cylinder where a flex just breaks the glazing but don't do any truing. Now of course I haven't seen one of the 2 cycle cylinders that you work on so there may ports to hang on.
