Hello, my Name is Ryan. I have been a long time lurker on this forum for various engines but first time poster. I have an Earthquake MC43 2 stroke tiller which I was given that would not run at all, but had perfect spark. After draining the old rotten fuel, and replacing the carb, fuel lines/filter and spark plug it still would not fire on a fresh batch of fuel. I ran a compression test on it and it made 80 psi which I would have thought would have been enough, but still would not run even on starting fluid. After removing the exhaust and finding the piston and rings badly scarred, I tore it down and I'd like to hear a second opinion on the matter. Most of all the 2 stroke pistons I have done had instructions indicating that the arrow faces the exhaust side of a cylinder. This motor had the arrow facing the intake port, and the ring gaps and pins while not exposed to the exhaust port, were facing that side. I am certain that this piston was installed incorrectly from factory, and am assuming this is the reason for the failure, but without knowing the history I cannot say for certain. I have a new cylinder and piston I ordered from AliExpress ($20) on its way that appears to match the casting number and dimensions exactly, however I want to be certain I have the piston on the right side. There is no difference on either side of the piston skirt. Am I correct in thinking this engine was incorrectly assembled at the factory?

Ouch!!
 
You are correct, the arrow SHOULD face the exhaust port.
 
Also, the skirt isn't why the piston has to be installed correctly but because 
the ring ends are not supposed to rotate as there are "pins" in the piston to keep the 
rings from moving.  Should the piston be installed backwards, the ring END GAP can catch 
a port and tear it up on it's own...
 
Most scoring to the piston and cylinder is almost always on the exhaust side. 
(Overheating, not enough oil in the mix, etc).
 
If it came off that way who ever assembled it last (factory or previous tech)
messed up bad.
 
And 80 PSI is not enough to run the engine..  The new piston and cylinder should solve your issue...
 
.