Questions about compression and blow by.

It sounds to me like you're still just retardedly rich. When mine was pig rich, the idle mixture screws wouldn't do anything until one of them were all the way in and then It would idle up a hair. It was pretty useless to try and tune it with a vaccum gauge because it wouldn't show anything really.

Also if you're still rich, it requires more air to run so you may want to check your primary transition slot and see if too much of it is uncovered. That can sometimes cause the mixture screws not to jive.

You said you installed the "properly tuned" carb, but was it properly tuned on this motor? Every motor is different and they wants what they wants. Take some starter fluid give a quick burst into the carb as it's idling and see if the idle goes up or down. Up means it's lean, down rich. Or take a piece of cardboard or something and start to cover up the secondaries on the carb and see if the idle goes up or down. If it goes up it's lean, down it could be good or rich. Of course these little tests will just get you in the ballpark. The best way is to put a wideband on it and see exactly what's going on or give it the old full throttle run and kill the motor and read the plugs deal. Myself I struggle with carb tuning so a wideband afr gauge makes a huge huge diference.

I'd say get it dialed in precisely, squirt some ATF down in the tubes, and drive it a while to at least give it a chance to reseat the rings or whatever. You'd know the diference in gas smoke and oil smoke just by smell.

Yep, the smell I'm getting I believe is oil and not fuel. Gonna take the carb back and let my guy check it again. Thanks.