Are you saying the engine runs OK when sitting on it's landing gear but when you pick it up and hold it nose high that the fuel starts running out of the muffler? If this is correct, do you run the engine up to high RPM before you lift the nose to give the engine a chance to blow accumulated fuel out of the muffler? What would happen if you had someone hold the plane in such a way that the motor was in a "normal" attitude and then lifted the nose? This might also give you a clue. Do you have a good reason for this mounting position?