While breaking in my TT .46 engine at about the end of the first tank the muffler rattled loose a little and some greyish, black liquid was seeping out around the muffler/engine connection. I quickly shut the engine down tightend the muffler up and put it away for the time being. Is this normal? My procedure for break in was as follows:

1. Applied a little after run oil in the carb and top of the cylinder before 1st start-up.
2. Adjusted the needle valve to ~ 2 turns out from lightly tighetned in position
3. Primed the engine
4. Applied the Glow plug ignitor to the engine and cranked it over with electric starter
5. Upon start-up opended to WOT and with a tach adjusted needle valve to ~500 rpms rich of the peak rpm

I am using a 10x6 prop as suggested by the manual. I read the manual several times but it does not give much of a detailed break-in procedure other than don't run it lean and a prolonged break-in is not nessecary and what fuel/prop to use.
I don't believe I did any damage because it still has that tight squeeze when cold at TDC associated with tapered bore ABN engines but I want to make sure. Thanks.