Perkins 4.107 seizes after rebuild

Long story so I will try to shorten it up a bit. I have a 1985 (ish) Perkins 4.107 in a generator. The unit blew a head gasket and was severely overheated but we did not see it happen. We pulled the head and found out the head was cracked and there was water in the oil so we drained everything. This unit was so hot it actually heat cracked the injector covers found in the head and in cylinder 2 a chunk of it was bouncing around leaving dents in the top of the piston. After inspecting the cylinder walls we were shocked at how good they looked so we reassembled the engine. The engine stared right up and ran fine for about 20 min but was running rich and smoking blue so we suspected rings. I know starting it sounds dumb but we had pretty much written this thing off anyways which is a shame since it only had 88 hours on it. Okay so it was up to temp and I noticed the water level dropping and immediately suspected the sleeve o-rings since this is a wet sleeve engine. Sure enough we pulled the pan and the water was dripping into the pan from the around the sleeves. We pulled the head and were going to pop out the sleeves and replace the o-rings but as we took the pistons out ring parts went flying everywhere and one of the pistons was actually melted. I called AGCO who ordered me an entire rebuild kit, sleeves, rings, pistons, gaskets etc. The crank and mains are perfect, no scoring or any signs of damage and the cam from what I can see if perfect as well. So we reassemble everything after having the block checked. Cranked it with no fuel till the oil pressure came up to 55psi then let it fire up. Ran absolutely perfect for about 3 min, as the water temp comes up to about 130 she starts to slow down and lug the engine, the dovernor kicks in but cannot compensate and she seizes solid. It you let it sit for less the a minute it will start right back up and do the same thing. This engine is set for 1850 RPM so we slowed it down to an idle and after doing so it runs from cold for about 7 min then does the same thing, cannot turn it with the starter or a wrench. We tear it all apart again expecting to find torn up rings, pistons and sleeves, there is no sign of wear anywhere inside the engine. We then turned to fuel thinking maybe its hydro locking since as it warms up the diesel fumes from the exhaust are so stong it burns your eyes. Sent the injectors to a spe******t for testing, they are also a Perkins service center, they called and the injectors test fine. Let me also mention the timing and cam gears we never touched so the pump and timing is still factory set. The only thing I can think of it that that rings were not correct or they need to be gapped and ground down since the heat would make them expand and essentially seize the engine. I am at a total loss here folks, I don't know how this could be fuel and if it were rings I would assume we would have broken things by now. Suggestions? What could make it seize up to where you cannot turn the crank? Cooling system is working fine and its not getting hot, we have never made it to operating temperature thus far it stops running before that. Like I said...let it sit and starts up like a new and runs fine for less than 5 min and does it all over again. Fuel pump? Flooding? From stone cold it starts right up with no glow plugs or ether so I know compression is good.

Are pistons, rings & liners all a one size matched set? You may have been supplied with chrome rings & liners this will cause a lubrication problem,have rings been fitted right way up & gapped to spec ? Have bearing shells & thrusts been sized & fitted correctly to mains, top & bottom ends. Did all oil ways get blown out,noting flow at rebuild time? Is motor still recording good oil pressure at lock up? Where grankshaft web deflections checked?