Rick Spivey
501 Club
You appear to be measuring the correct gap, and it is indeed much too large. 0.040" is about as far oversize as you want to bore a cub engine, so I would have the cylinder diameter checked (in more than one place if doing it yourself) to see if maybe the ring gaps were made too large at the last rebuild...cross your fingers that you won't have to bore the block any bigger. There are some claims on this site concerning the availability of sleeves for a C-60 engine, but I have never seen them personally. A good machine shop could probably sleeve it, but again, no personal experience. Go with Eugene's advice, measure everything first before committing to any path forward, and let's all assess what your options are.