Volvo EC300D

[RCKiwi]

Alloy rubbing on alloy, even with a snifter of oil, never lasts. I'd opt for a plain old mild steel or brass rotary valve in an alloy housing.
Also, the back of the valve does not need to be in full surface contact with its shoulder in the block - try say reduce the rubbing shoulder area (smaller diametre step) as the amount of friction will be a result of such a large surface area. Having a smaller "rub area" will result in less friction but a downside may be higher wear rates - another good reason to add a anit-friction washer.
The bearing would be a good idea if say you are operating the valve by push rods, etc so to alleviate side load - if you're mounting servos inverted, direct inline as is popular with commercial, it may be additional un-needed machining.

Keep plugging away at it - there's a fix here I'm sure