Just to have asked the obvious: are you certain that you've got the plumbing connected correctly? It's more complicated than a normal engine, and people tend to move the tubes around when storing an engine, to keep dirt out. The manual is here:
fz53.pdf
Useful additional information (VERY useful, in fact):
Fact Sheet: YS Engines
Now to your question about where the fuel flows: this explains the workings of the regulator valve:
http://www.gbrcaa.org/acrobatfiles/Y...%20Systems.pdf