Am I the only one that is curious what is *actually* wrong with this engine? haha.
Seriously; I've yet to understand because the sleeve isn't supposed to move at all.
If you're turning the crankshaft and the piston "stops moving"...and something is broken...then you're either going to feel it bind and never move again or it will slowly start coming back down.
The piston "lags" in position over top dead center...it looks like it holds still for quite a while.
The noise that it's making, is it sqeeking and very hard to turn at the same time?
I'm with Houston on this one, sounds like you need to preheat it and start over.
A fun animation; not quite our exact setup but I'm sure most will get the idea...
http://www.animatedengines.com/twostroke.shtml
And just for those that need a real basic rundown, watch the video series (not saying all content is correct, but hey, it's pretty good for those that need to learn).
http://www.youtube.com/watch?v=UTIINXvzi5s