Hi James
The gaps should be staggered, and "away from exhaust and intake ports". You stagger them to retard compression loss. I have to be honest with you; my copy sheet for the Muncie/Neptune, 1936 Model # OB16 is very worn, and it looks like; but not sure of the .020 ring end gap clearance. Maybe someone else reading this about your 2 1/2 bore size could chime in for you? Above all make sure those new rings in that older piston fit snug; as you do not want wobble.