I'm a fan to OS products but, I'm sorry Bax, the carburetor is the problem. The 160FX is not easy to tame.
I have run this engine on a bench with the os muffler and large tubing. I never can run in rich condition at full throtle (3 turn on needle scew) and with idle screw correctly adjust to good idle and good replay, the engine has running very very lean in mid throtle (4500RPM) and grip the piston in the liner. I have tested with a Cline regulator (between needle and carb and before the needle), same thing, impossible to adjust correctely.
I had a perry Carb (0.375 venturi) in my shop and install on it. Now the engine run verry smoot with strength power and all the time in perfect air/fuel ratio. The engine is install with cline regulator and pitts muffler in a Yak 54 72" and swing a Masterairscrew 18X6 at 9200 rpm (9400 peak). The power of this engine is verry impressive. It's a beast.
The perry carb is # 4501, (0,375 ventury 0,590 buddy)
http://www.perrypumps.com/prod01.htm
Sorry for my poor English
JJ Marier