If the white is teflon (probably is) then it is worn a lot as the seal is no where near close to being snug on the valve stem.
Otto, I did inspect a valve seal early on but only visually to see that it was in place. I should have pulled the seal off the guide and checked it but didn't (my bad, and I'm paying for it).
Guitarplayer, I did pre-lube the engine by running the oil pump with a drill prior to starting and if the seal is just worn out it's my bad for not checking them more closely when I originally put it together. I do recall using a sleeve to protect the ID of the seal when installing the seal over the end of the valve so they must have been tight at that time, or at least that is what i recall.
The information to date is based on one valve and one seal so I will need to update after I have inspected all 8 intake valve to guide clearance and seal conditions. Given the deposits on the intake valves I am hoping that I have found the main source of the oil consumption and smoking issue that started this discussion.
