Hughes "retro fit" lifter not pumping up!

Once the valve is closed on the seat, there is no more pressure on the pushrod and the lifter's piston to push any oil back out. There should be a light spring in the lifter under the piston to keep the pushrod's weight supported. So, lifters in the closed valve position (on the heel of the lobe) should not leak down at all.

File:Hydraulic Lifter.jpg

With open pressure, the check ball and the tolerance of the piston to the body are all I know of that keeps the oil in the lower chamber. With the machining issues that the OP has run across, the machining tolerances and finish seem the be prime suspects.