When you rebuilt it, did you put the rings in their respective correct groove and not upside down? (top ring wiper down, middle, and oil ring) Did you lube all the parts as you assembled them? Did you have the piston facing the right direction? (arrow) Was the con rod torqued to spec? When you installed the case cover, did you rotate the governor gear to mesh with the other gear before seating the cover to the case?
It sounds like a definate lube problem which "could" be caused if any of the above are not correct.
The oil that was grey in color is metal/aluminum particles suspended in the oil.