The purpose of the oil distributor is to restrict oil flow to the upper end of the engine until the main bearings and rod dipper fill tubes receive at least 15 PSI of oil pressure. An engine with badly worn main and/or cam bearings will never make enough pressure to overcome the oil distributor spring, so it cuts off oil to the top end to prevent seizing up the crankshaft. A splash-oiler 235 I tore down some time ago had the same type of sleeve around the spring.

Have you checked the supply tube that runs diagonally through the water jacket to see if it's restricted?
Jerry

"It is better to be silent and be thought a fool than to speak and eliminate all doubt!" - Abraham Lincoln
Cringe and wail in fear, Eloi- - - - -we Morlocks are on the hunt!
There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self. - Ernest Hemingway
Love your enemies and drive 'em nuts!