"My turbo was leaking oil. I think the cylinder was washed out from the oil /turbo leaking."
I doubt it was oil wash.. More likely that the oil, being poor in octane, created some knok.
What do the plugs look like?
"I found oil on top of the power plate during disassembly".
PCV problems?
Leaky turbo could have allowed this.
" I don't know why someone would balance only one piston".
Could be that the mfgr had done a "close match" of a set. Most aftermkt piston users have the complete engine balanced. That would likely have resulted in more machine evidence, on other pistons.
I'd start w/ a COMPLETE measurement of all components. All the way from the bores to the ring gaps, to the brg clearances, to the piston dimensions.
I'd then consult w/ the piston mfgr and see what they recommend.