Hello, new to the forum because I had to get some input from those who know Samurais.  I have an 88 Sami that i just bought a "new" engine for.  I say "new" because I guess it is technically a rebuilt engine.  The builder used a stage 2 cam and 10:1 flat top pistons for a little performance upgrade.  After putting it in everything was fine for about 1000 miles.  Getting decent mileage (23-25 mpg).  One cold morning I went to start it, it was a little hard starting (not uncommon in the cold), get it going and it dies.  Fire it up again, it runs briefly, makes a funny noise and i lose compression.  Pulled the timing belt cover, timing belt is shredded down at the crank because while it is turning freely the cam has seized.  So, I call the engine builder and he says he has seen where overfueling has lead to this.  I guess the theory would go 1.  To much gas 2. Gas gets into oil...(around pistons i assume?) 3. Viscosity of oil is lost 4.  Lots of damage begins to occur 5. First outward sign is the seized cam because it is the weakest point in the system.

Has anyone else seen or heard of this?  I am not a big engine guy but it just doesn't sound right.  There was plenty of oil in the engine, but now that i have drained it i see that it is pretty black.  Also, the oil pressure light would come on at idle but would go away at just a slightly elevated rpm.  When i noticed this i contacted the builder who said if the crank is turning the oil pump is pumping oil and it was probably just a bad electrical connection.  Any ideas on this?  Thanks.

Theoretically, yes - in reality, I have my doubts - when you drained the oil - did it smell of fuel?  If not, overfueling was probably not the cause.  You'd have to have a lot of dilution to reduce the viscosity of the oil to the point where the cam siezes.

I'd be more concerned about that oil pressure light coming on at idle - and the reasons for that.  The light comes on when the pressure drops below 2~4 psi - oil pressure on one of these engines at a warm idle runs 20~25 psi - FSM spec is something in the vicinity of 40~60 psi at 3000rpm with the engine at operating temp (I'm too lazy to go downstairs for the FSM).

If - when contacted, the engine builder's comment was - if the crank is turning, the oil pump is pumping, then I'd say he owes you an engine.  What he should have done to tell you to stop using the vehicle until you had the oil pressure checked - at the very least replace the switch and see if the light goes out, but preferably connect a gauge and determine if the oil pressure is within spec., and that would have allowed you to take corrective action before the damage occured.

Yes - if the crank is turning the pump is pumping - but it doesn't mean that ...

a) oil is flowing.
b) enough oil is flowing.
c) oil is getting to where it needs to go.

Sounds like the me the engine builder either doesn't know much about engines, or he was just trying to get rid of you, with the comment of "if the crank is turning the oil pump is pumping oil".  Yes, if the crank is turning then theoretically the oil pump should be pumping oil (since the oil pump is driven by the crankshaft).  But was it pumping enough oil?  I have heard of people rebuilding an engine and not putting on a new oil pump and the oil pressure being low.  I would ask if he put on a new oil pump.  But from his previous statement, I wouldn't bet he will tell you the truth.....or he will probably give you a vague answer.

The oil light on at idle but goes out with any engine RPM above idle is the classic sign of either a weak oil pump or worn/loose bearings (not allowing enough restriction to raise the oil pressure).  
While thin oil (caused by lots of gas in the oil) could cause low oil pressure, I would highly doubt this is the case.  I would guess there would have to be lots of gas in the oil.  So much so, that the oil would have reeked of gas when you drained it and you would have definitely noticed the smell of gas in the oil.

Sounds like to me the engine builder is looking to blame someone else for the cam seizing, by saying it was overfueling and got gas in the oil.  If it was overfueling that much, I don't see how your MPG could have been as high as it was.
If he is a reputable builder, the engine should have had a warranty longer that 1000 miles.  Ask him what the warranty is on the engine.  If he tries to blow you off, keep on his ass.  Sounds like he will probably be a PITA to deal with, to get the engine warranteed.

The oil did not smell of gas and I was not gaining any oil volume. I guess I should have been more wary of the oil light, just didn't think i would have to with a new engine. I just pulled and crated the engine today and am going to send it to the builder.  He came highly recommended, only does zukis and toyotas. I guess i will just have to wait and see what he says.  Thanks.

Also, if the cam would have seized within the first 20 miles or so, I would bet it would be from the headgasket being put on wrong (seems to be pretty common to do on 1.3 and 1.6 suzuki engines....although it is quite obvious when it is put on wrong (to me, at least)). 
When the headgasket is put on wrong, it blocks to oil passage to the top of the head (the cam) and the cam will seize fairly quickly (there is no oil reaching the cam).  But with you running it 1K miles or so, it would be pretty unlikely the headgasket being put on wrong was the issue.

I will preface this by saying it is 100% the owners responsibility to make sure that the engine has proper pressures when starting, you should have shut it down ASAP when you noticed the oil pressure light was illuminated and verified the actual oil pressure.

I highly doubt that a fuelwash(overfueling) would impact the camshaft before the main, rod bearings and piston rings took a dump first.