Hi Basil

Sounds familiar so I am going to try and assist. Is this the 40LA with the remote high speed mixture adjustment (needle)? If so I had the same problem.....mine is a OS 46 LA has the same config......was about to toss the thing also but it was brand new so I persisted and almost two tanks later and much looking and probing....turns out that the nipple from the remote to the carb inlet nipple sucks air between the fuel pipe and the remote pipe, on the join where the two meet......reason I worked out was that the nipple on the remote does not have a flanged end, it is just a pipe for want of a word. see the attached pic...well I hope it comes out on the reply...

Remedy was a micro tie wrap…..problem solved and the motor performs perfect and idles perfect…..The yellowish substance is nothing to be alarmed about…all it is s exhaust leaking at the muffler engine join had that two until I used permatex ultra copper high temp RTV silicon gasket maker made by Locktite for the muffler….subsequently all my engines have had mod on the muffler with out a drop….no need for those flimsy gaskets.

Hope this helps

SwaziNev