A sign of the free lift cylinder bypassing is when lifting, the free lift cylinder raises part of the way and the secondary cylinders start to raise too early. There is hydraulic oil getting on top of the packing and causing it to hydra lock.
If you continue to raise it to the top with the secondary cylinders fully extended, the free lift cylinder will then continue to lift forcing the hydraulic oil to the bottom of the packing where it belongs. After that if you lower the mast all the way, the mast will stage in the proper sequence until it sits and the fluid works its way back to the top of the packing again.
When disassembled you may as well replace the check valve in the bottom of the cylinder due to debris from the deteriorated seal. This will help prevent possible future problems
The only repair for this is to reseal the cylinder. Be sure to inspect the cylinder ram for nicks or scores to ensure after resealing the cylinder, the seal will not be damaged again
The most common cause for the seal failure is neglecting to change the hydraulic oil and filter according to the service manual. Hydraulic oil breaks down just like the oil in your car and needs to be replaced once per year.