Sounds like you have the wrong needle valve , My OS .40 LA doesn't have a low speed needle valve. But it does have a carb bleed screw. This srcew is located on the carbs body . When I get my camera going again I will post pics. As far as it being a lemon I doubt it but one nver knows.

I found the crack to when I took the back plate off . I had this plate off 2 times prior to today and never noticed it . It is a hair line crack right underneath the flanges for mounting. The one reason I new I was losing compression was because when I first bought this engine used , I was able to crank the shaft with my hand over the muffler's exhaust pipe and fuel would flow into the carb.

How much did you pay for the engine ? might by it from just to use the parts