is the edge of the diaphragm closest to the camera torn ? It's really hard for me to see. Otherwise it looks OK to me. That's not to say there isn't a leak or something there which would cause a problem with the pop off pressure.
You said that the motor has 2 hours running time on it. If that's race time, that would be about the maximum allowable before a rebuild. Do you know when the oil seals were last replaced ? Do you know when the main bearings were last replaced ? Is there any up/down movement with the crankshaft if you push/pull it with your hand ?
You will need to go through my suggestions above and rule them out one by one.
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