If your engine's low in relation to the tank, fuel will tend to siphon when it's not running. That's normal. Just put a clamp on the line when you're not running it.

If the engine wasn't damaged when it was hydrolocked, then it should run at full throttle regardless of its position. Try turning the model upside-down and working with the engine that way.

Because the enigne has an air-bleed carburetor, you won't be able to get as good an adjustment for idle and low-midrange as you would with a carb that has an actual idle mixture adjustment.

Inverted running can be problematic for a lot of engines. The glow plug is the lowest point of the system, and can act like a sump at low throttle settings. This makes idle and acceleratioin problematic.

If all else fails, put the engine upright on a test stand and get it adjusted. If it runs "all day" on the stand, the engine's fine. It's the inverted mounting that's the problem.

The fuel tank should be mounted so that its centerline is even with the center of the carb or up to 3/8" lower. With many models, the tank's higher than that, and a high tank will cause problems.