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Welcome to the rewarding but sometimes frustrating world of engine rebuilding!
First you must understand that everything must be clean, clean, clean prior to reassembly... Especially the cylinder bores as honing grit can hide in the small ridges created in the process.
Second, You seem to be doing the right thing and measuring your clearances as you go. If you haven't it is not too late to go back and do so. Bearing clearances (plastigauge) and ring end-gaps are a couple extremely important ones!
I used the first oversize rings on my re-ring on the B20F/B I recently "freshened" due to being very near the limit for wear. This required me to adjust the end-gaps on the rings (a lot!). The engine turned over by hand only by using either the flywheel (hard) or a wrench on the crank pulley nut. This is not unusual. However, it should not require a lot of effort on the wrench! Nor should it have any "tight" spots, the effort should be pretty constant (once the head is on, rocker shaft in place it will get harder and inserting the plugs will make it harder yet!).
It does indeed sound like your timing gear is very close to being shot. The distance the crankshaft turns before turning the camshaft is defined as the backlash. Definitely time to replace it as the engine is open! The interface between the gear hub and the body/teeth should be "airtight" and no fluid should be able to go in there much less squeeze in and out as you describe.
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Mike!
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