I meant that any remaining steam that did not come out the exhaust may still carry on condensing to a small degree as the piston is going back up. Eventually it will end up being compressed.
The slot is more to stop the piston rotating than coming out the top as the spring below takes care of that and keeps the tappet on the cam. I could not really see how the holes /slot connected from the earlier photos. But looks like the top drilling and then the one towards the cylinder keep a passage open once the valve has covered the inlet thus allowing trapped air /steam out via the head.
These engines don't work quite so well on compressed air due to the lack of expansion but if linked to a flash steam boiler can break records, this is one being tested

There were a few steam cars, this one went for the record

Multi cylinders of a uniflow type design
