0.4 mm ring gap is only 0.016". That is the top limit for a brand new engine. The service limit for a used engine is 1.0 mm (0.039"). If the other rings have similar gaps, they do not require replacement, and the bore can't be worn very much or the ring gaps would be greater than they are. In other words, you do not appear to need new rings - but you should clean out the ring grooves in the piston carefully without removing metal, and clean the rings so they have not grit or rust on them. You should not formally hone the bore - I would just clean it with some 400 grit paper, swashed around in the bore with my finger tips.
I can make a new guess as to what happened to that engine: it did not run until it started to smoke, it ran until somebody accidentally ran it without oil and seized it up, whereupon they panicked and scrapped it.
I suggest you clean everything up, linish the crankpin with 400 grit paper until it is smooth but without removing any measurable amount of metal, do the same with the rod bearing, put it back together with lapped valves, and start work on cleaning the carburetor.
