When I got my basket case Goldie the cover plate on the top of the push rod tunnel had a breather pipe attached ..the bike had a racing history... so the breather may well have been a cure for the same problem that you see. Good luck.
You may not have timed the breather incorrectly. The method of using the cover screw position is not always correct. The breather should be fully open 10 degrees after bottom dead centre. Take off the tacho drive so that you can see the position of the rotating breather. Take off the timing cover. Mark the rotating element. Mark the postion of the breather exit on the timing cover. Put a timing disc onto the cranbk. Replace the breather and check the fully open position. The mag gear has 36 teeth. It is half time. Each tooth represents 20 degrees of crank position. Mine was 2 teeth out. At lot of leaks.
I just did a trial fit of the head (DBD34)on my rebuild and found that the head bolt (65-1822) located inside the pushrod tunnel was bottoming in the head and thus would not have been pulling the head down tight in that area, the motor prior to being pulled down showed evidence of leaking here. As found, there were no spring washers (2-2903)on any of the 4 bolts. After installing the spring washers I found that just the one spring washer on this bolt was insufficient.
Mine leaked when I bought it. It turned out the problem was the same one as Geordie had where the lock washers had been left out. Some of the bolts were bottoming before they could pull the head down fully. I made some lock washers by turning down the OD of some standard lock washers. I re used the gasket as it was nicer than the replacement one I had. There had been some evidence of leaking of combustion pressure so I lapped in the joint. I peeled off one layer of foil because according to my measurements it was a bit thick. I coated the outside layer of the gasket with copper coat around the pushrod tunnel area only. When re assembled it no longer leaked.
The only annoying thing about this job is you have to remove the magneto. Apparently some racers left out the head bolts behind the mag. to avoid this problem, but I put all my bolts back in.
Hi, sometimes the bolts will bottom out because over many years, and many thread chasings with a tap, (and no one remembers to empty the debris out of the bottom of the bolt holes) this causes a build up in the bottom of the bolt hole which can get thick enough to make the bolt bottom out before it can get to the proper torque rating. I use a piece of mechanics wire in the bottom of the bolt holes to stir things up, to get loose enough to either vacuum out, or Invert and tap on the side to get them out of the hole. Mechanics wire and a air pressure blow gun good also, if one has a compressor.
Use head gaskets from Phil Pearson. They are expensive but of very good quality.
Try this method for setting the compression of the head gasket. Remove the head and the barrel. Invert the head on the bench. Fit the gasket to the barrel with grease and invert the barrel onto the head. Take a set of feeler gauges and reach down the barrel to measure the gap. The barrel is wide enough to allow you to reach down. Stip layers off the gasket until the gap is corret. Fit the short head bolts and check that that pull the barrel to the head.
If all else fails it is time for Honda Bond, or Yam Bond, or Ducatti Bond. They are all the same. Grey and expensive.