Did I ruin my engine? (TAOTAO ARROW 150 w/GY6 150CC)
 

Thanks in advance for your help, and I apologize for the 'bullet point style' message but I am a bit flustered.

Brand new TAOTAO 150cc GY6 engine powered go kart.

Tested oil levels prior to start up, they were near the upper level of the hash marks.

During start up, exhaust smoked heavily. Assumed it was part of start up, let engine warm for ten minutes, still smoking, drove very slowly on paved neighborhood roads for one minute, still smoking from exhaust, then engine stalled when I let off gas during a slight downward slope.

Pushed back home, and checked oil again, much lower (lower hash marks). Leaking visible when I get under scooter. Remove shroud, this gasket practically falls off. It looks like oil is coming from here. (Pictures below)

So just a few questions, it that gasket just to keep the shroud from rubbing on the metal, or is it a badly installed valve cover gasket? If it is just a 'plastic on metal barrier gasket' should I just order a whole set of gaskets and start with the valve cover and see if that helps, because something is leaking, for sure.

The main question I have is if I ruined my engine. Will fixing the leak (wherever it ends up being) and adding more oil allow the engine crank? I don't see how those things alone would allow the engine to start turning over if it is not turning over now (since that stuff is all just mechanical, right?), unless there is some safety that prevents start up based on low oil level? I am hoping this is the case, but I don't know enough about these engines to know what kind of protections they include.

If I have ruined my engine, and fixing the leak and adding more oil will NOT help (maybe I have seized the engine?), what are my options then? Are there any resources for rebuilding an engine?

I purchased from a dealer with a warranty, and am waiting to hear back from them, but I need to get all my ducks in a row to handle this on my own if they tell me to kick rocks.

Thanks again for your help, and like I said, I am a bit flustered so I apologize if anything is coming out as gibberish or not explained well.

Video of startup:

drive.google.com/open?id=0Bx8zAFJkqoUic3ZvdXlJZVRnYmM

Pic of leaking with shroud:

http://imgur.com/vasJJLm

Shroud removed, this gasket is flopping around:

http://imgur.com/j7DCSw1

UPDATE:

Decided to take the valve cover off as I was stuck with all other troubleshooting methods.

Here is a pic of the gasket: http://imgur.com/vdSS3rY

And a close up of the blemish: http://imgur.com/dSjygOx

New gasket is on the shopping list!

hard to say if you did any damage. exhaust smoke could have been from the bad valve cover gasket installation letting oil get on the exhaust pipe and the resultant smoke blowing through the shrouding that takes care of the engine cooling. if this is a new ride, i'd go right back and get it taken care of under warranty. otherwise, i'd put a new valve cover gasket on it, clean all the plastic shrouding check the oil level and see if it runs with no abnormal noises etc.

xbird, I did just that!

I picked up a new spark plug, CDI, and ignition coil in addition to a new valve cover gasket from a local parts supplier ($16)

Turns out the CDI had different terminal adapters, so I couldn't hook that up, but I was able to install the new spark plug and ignition coil, in addition to replacing the gasket.

Engine started up and was a bit rough, but after 10 minutes or so of gentle driving it was much smoother. There were a few times it shut off with moderate gas, so I would just let it sit for two or three minutes, start it up again, and try again.

Also, the exhaust smoke was much less than before, and seemed to dissipate nearly entirely at the end of my 10 minute ride.

Not sure if the bogging down with gas was due to the fact that it was still getting rid of everything from start up, or just because it was cold, but having gotten it started and running, I am much happier and will run more tests tomorrow.

That sure looks like an engine that needs a top end. If that is/was a brand mew machine and the dealer had started it themself and let it go out the door like that...they should be ashamed of themselves. If you bought it in the crate and that was the first start up...could be the rings just need to seat (in which case that smoking will go away after your first ride or two) or it simply has a bad engine from the factory. I've fired up many a brand new engines and the only smoke I get is smoke from paint burning off new parts or light oil smoke from a part that was coated in oil to keep rust at bay. Neither of which was like yours where oil was coming out of the exhaust like that.

A new engine should not smoke at all. Even before the rings seat they should stop oil from entering combustion chamber. I would first determine if smoke is oil burning by its smell. If so get the dealer to replace the engine while still under warranty.