Is the transmission case not bolted to the engine block? I don't see how it can get grounded any better than that.
Now it is possible for electrolysis to take place when you have dissimilar metals in contact with each other. But some moisture has to be present. And if this were a problem with the OEM gears you would hear about it. And steel isn't particularly susceptible to electrolysis. My guess is the gears weren't replaced during the "rebuild", or possibly they were replaced with substandard gears.
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Today's Featured Article - Earthmaster Project Progress Just a little update on my Earthmaster......it's back from the dead! I pulled the head, and soaked the stuck valves with mystery oil overnight, re-installed the head, and bingo, the compression returned. But alas, my carb foiled me again, it would fire a second then flood out. After numerous dead ends for a replacement carb, I went to work fixing mine.I soldered new floats on the float arm, they came from an old motorcycle carb, replaced the packing on the throttle shaft with o-rings, cut new ga
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