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Ron, steam condenses to water and can leak past the rings to get into the oil. Do you have a plan to minimize rust and wear from this? The area of "blow by" steam that gets by the rings and into the engine block does require design effort. Using normal motor oil, it wouldn't be very long before the condensed steam (water) would get emulsified in the oil and greatly impare it's ability to provide an "oil cushion" within all the bearings inside the block. Two solutions to this are planned for use simultaneously. First, the use of synthetic oil, which will not allow water to emulsify, but remain as whole "globs" of water. The second is to provide for an external oil/water seperator using gravity to "filter" the water from the oil. In an extream case, a "seterator" could be designed using either cyntrifical force, or more easy to build, one using heat to boil off the water as steam, allowing it to escape.
The only area of potential rust is the combustion chamber area, the area left when the head is at TDC (Top Dead Center). This includes the piston head. Research on "real" steam engines indicates that rust only comes into play in this area when it is left open to access by oxygen (air). Steam from the steam generator contains no free oxygen and so long as the system is left closed, there is very little chance for rust which requires oxygen. The cylinder itself is constantly coated by oil in the same way that a normal gasoline engine is - oil is "splached" into the cylinder area by all the movement within the block. Actually, gasoline engines have this same problem to some extent as the conbustion byproducts include a rather large amount of water, as you have probably noticed at some time. After starting a cold engine, you will frequently find a bit of water running out of the tail pipe - until it heats up enough so that the water escapes as steam along with the rest of the combustion byproducts.