Air leaks in the fuel lines and tank make the engine run lean... not rich.

You already pulled off the needle limiter... pull the needle and look at it. I had one needle valve that came from the factory with the actual needle portion missing. (should taper down to appx 1/128 inch dia at the tip. If it ends abruptly after the threads you found the problem.) Its a rare problem... but its happened before.

The engine is supposed to spit a fair amount of goo out the exhaust. Thats the unburned oil. The fuel has appx 16% to 20% oil by volumn. 90% of the oil does not get burned.