On September 11, 1996, at 1237 mountain daylight time, a Cessna 177RG, N2797V, owned and operated by the Peterson Air Force Base Aero Club, was substantially damaged when it struck a tree and two vehicles during a forced landing at Colorado Springs, Colorado. The commercial pilot was not injured. Visual meteorological conditions prevailed, and no flight plan was filed for the post maintenance test flight conducted under Title 14 CFR Part 91. The flight originated at Colorado Springs on September 11, 1996, at 1225. According to the pilot, the airplane had just undergone a 100-hour inspection that included the installation of a factory remanufactured engine [according to Textron Lycoming, it was a factory overhauled engine]. At 1236, shortly after leveling off at 8,000 feet msl, the pilot advised the control tower that he had a "runaway prop" and needed to return. Propeller rpm (revolutions per minute) increased to 2,600, then increased to redline (2,700 rpm). The pilot was given the option of entering a right base for runway 17R or a straight in approach to runway 12. He chose the latter. The pilot said he reduced manifold pressure to keep propeller rpm below redline. The engine began vibrating as the airplane passed 7,800 feet and the pilot sighted a suitable emergency landing site as the airplane descended past 7,500 feet. At 7,000 feet, the engine seized. At 1237, the pilot advised the control tower that he would be unable to make it back to the airport and was going to land in a field. The pilot said he misjudged his altitude and speed and overshot the first landing site (a soccer field) and proceeded towards his alternate landing site (a city street). During the landing, the left wing tip struck a tree, then the airplane collided with two moving vehicles and a road sign. On September 17, 1996 the engine was examined at the facilities of the Peterson AFB Aero Club in Colorado Springs, Colorado, by representatives of Textron Lycoming and Cessna Aircraft under the supervision of an FAA airworthiness inspector. According to the Lycoming technical representative's report, fresh clean oil was noted on the bottom of the firewall, nose landing gear, on the bottom of the fuselage, and on the left horizontal stabilizer. There were holes in the top left part of the crankcase and in the top center portion of the rear accessory housing. The no. 4 connecting rod had separated. There was no oil in the crankcase, and the crankshaft would not rotate. The tachometer drive fitting was loose where it attaches to the crankcase and the torque stripes were not aligned. All but two of the ignition lead "B" nuts were loose. A written statement was submitted by the mechanic who had installed the engine in the airplane. He stated that two static runs were performed on the engine the day before the accident "in accordance with Lycoming Service Instruction 1427B." The first run was for five minutes, followed by a cooling off period. The second run was for 25 minutes, during which parameter tests, including propeller cycling, were conducted. All pressures and temperatures were normal, and no leaks were detected. After the engine was shut down, one quart of 100 straight mineral oil was added to the crankcase. [According to Lycoming Service Instruction No. 1427B, dated February 8, 1993 (attached), the first flight should have been for 2 hours, with power set at 75% during the first hour, and alternating between 65% and 75% during the second hour. No reference is made to performing touch and go landings]. Upon removing the propeller governor, Lycoming's technical representative discovered it had been installed incorrectly in that only one gasket was in place. He questioned the mechanics who installed the engine, and learned that they did not consult any factory manuals or instructions for guidance. They removed the governor pad cover that came with the new engine, and returned it with the old engine for credit. When asked the whereabouts of the two gaskets (p/n 72053) and plate (p/n LW-12347) that came with the new engine, they replied they did not recall seeing these parts. The mechanics had available Lycoming Parts Catalog PC-106, dated April 1985, and applicable to the O, IO, HO, and HIO-360 series engine with standard cylinder flanges. It did not pertain to the IO-360-A1B6D engine with wide cylinder flanges. PC-406-1 is the appropriate catalog, and illustrates that two gaskets (p/n 72053) and plate (p.n LW-12347) should be under the propeller governor when installed. Service Instruction No. 1438, dated July 9, 1987, cautions that one of the gaskets (p/n 72053) should be replaced by another (p/n MS9144-01). According to the Lycoming technical representative, correct stacking of the gaskets and plate when installing the propeller governor is critical and, if done improperly, could result in engine oil depletion. According to the Cessna Pilots Association Newsletter (September 1996, vol. 13, no. 9), there has been at least one other accident attributed to improper gasket stacking when installing the propeller governor. "It's likely that, unless mechanics are conscious of the difference between these two systems and the need to keep and reinstall the plate with new gaskets while removing the governor, that mechanics could throw away the plate with the gaskets. If the plate isn't replaced in the gasket stack, a large oil leak will quickly empty the engine oil," the article concluded. On October 7, 1996, the engine was completely disassembled at the facilities of West Star Aviation in Grand Junction, Colorado, under the direction of an FAA airworthiness inspector. According to his report, the "severe connecting rod bearings and connecting rod bearing damage" noted was the "direct result of the loss of engine oil lubrication." On November 6, 1996, the propeller governor was disassembled and inspected at McCauley Propeller Systems in Vandalia, Ohio, under the direction of the FAA's Maintenance Inspection District Office. According to its report, the propeller governor was not the primary cause of the engine seizure. The governor had seized as a result of oil contamination and close tolerances of internal parts. "Loss of oil in the governing system caused the governor to cavitate and resulted in the propeller slipping to low pitch and creating the overspeed condition," the report concluded.