No matter how you turned the flywheel steam was constantly shooting out
the exhaust. Nice dry steam.
So I re-opened the steam chest back up and found some grit/goop in with
the slide valve. Just a tiny bit but after reassembly the engine kick
off and ran great. Guess maybe the goop was keeping the valve from
sealing tight and I just missed it the first time it was opened.
Not sure why it would run on air though. Just glad to get the engine
running on steam.
Thanks for everybodies' suggestions and help.

Jim