Allen, I was never a fan of the stick in the bypass. I personally disliked it so I removed it. What can happen though is the stick can oblong the cylinder if not properly fit. This can also happen if the head bolts are not properly tightened. If the top of the case isn't true where the liner sits, once the head is tightened down the bind begins due to it twisting the liner. Certain year Fox .35's are much more prone to this problem then others. So without seeing your engine, I would remove the plug, individually loosen one head bolt one at a time and see if the bind goes away. I had a aluminum dowel that fit the cylinder it was as wide as the top of the case but it had a male end that went down into the case. I would glue a ring of sandpaper on the case and lap the top of the case so the sleeve would fit properly against it.

This doesn't mean that this is your problem as I've seen many of these bind in and around the exhaust port cutouts. In that situation I've lapped the piston in the sleeve upside down in that area using the bottom skirt of the piston to do the cutting while the top of the piston the crown is just slightly outside of the bottom of the liner. The next problem could be the wrist pin hole is not cross drilled through the piston properly which is causing the rod to jump on the crankpin. The only fix to that is to have the wristpin hole re drilled properly and a    oversized wrist pin installed. This now removes the circlip grooves and a wristpin has to be made with Teflon end pads. The secondary problem to this is the already too thin con rod which will depart eventually.

You could certainly be experiencing all of the above here, but I would check the head first. In the past, I've removed the head gasket and lapped the cylinder head onto the sleeve. This now requres the bottom of the cylinder head to be sometimes lapped flat if a lot of material is removed during the above. Otherwise the cylinder head touches the case prior to being tight on the liner itself. When reinstalling the head screws keep a prop on the engine and constantly check and rotate the crank to see if any binds are present. You might just find that one screw is responsible for this bind. In those situations. I just barely snug that one screw and either ca the screw to the head or I remove and install removeable Loc- Tite. Ken

When I bought my four Fox stunt 35s on sale in 1977, I immediately lapped the piston and cylinder.  I use DuPont white rubbing compound, which is water based, and therefore easy to clean out.  I took the head off, put a prop on and put a little rubbing compound around the junction of piston and cylinder, above the exhaust port.  Then I wiggled the piston up and down, moving it higher and higher.  When the compound turned grey, I washed it out and put in new.  I stopped about 1/8 inch from the top of the stroke.  Took the engine apart, washed and oiled it and put it back together.

I burned up one engine trying to run it on crankcase pressure.  Fox put in a new piston and cylinder, with note that they were tight.  The cylinder was distorted, and the engine was as you describe.  I lapped it and was able to get it to feel good.  That engine now runs fine. 

It could be as simple as the muffler being tightened too much which is slightly warping the case. This can happen with either a strap on or bolt on muffler although the latest models with the full length mounting lugs are less prone to this. This phenomenon is not limited to foxes either as I have seen this happen to other brand engines as well. That's assuming that a muffler is being used.

I saw somewhere that someone used a certain kind of toothpaste for lapping.  Does anyone know which kinds will work?  I would like to start with that.

haven't tried lapping yet. just cleaning.  Liner has a hole in one side near the bottom.  which side should that go to?  exhaust port side?

Look at the cylinder so that you can see both ports.  One is just slightly higher than the other, the exhaust port.  It opens first so that the spent gas can first be expelled to make room for a fresh charge. Some of the clinders have the hole others do not.

Back before a machinist friend trued the bottoms of my Fox 35 mounting lugs, I used 1/32 ply tapered to fit the bottom of the engine lugs.  If you know anyone who can true the lugs, I'd recommend getting it done. 

Rusty,
Yes, the plywood shim goes between the engine mount lug and the aluminum mount pad. What it does is get some material to crush down and keep the case from distorting when the mount bolts are tightened.

Best,        DennisT