A few things...if you post on a weekend, don't expect a reply until at least Monday. We're not here to answer questions over the weekend.

"Factory" settings are only starting points. You'll NEVER have them as the settings you'll wind up running with.

The O.S. FL-70 does take a bit of running to 'come in'. We'll usually run it with a 12 x 8 APC prop for the first few runs. We'll use a 10% fuel with about 18% oil content that has a synthetic/castor blend. We'll not run it too rich, but we won't run it too lean.

There should be no wear between the drive washer and the case. If there is, then the crank's not fully-seated against the rear bearing, and needs to be driven forward a bit. Black from there does mean something's rubbing that should not.

When we prime the engine, we'll open the throttle to full, choke the carb, and turn the engine by hand in the forward direction. We'll do this until we actually see/hear fuel spitting out the exhaust (on upright or side-mounted engines). Turn it slowly backwards one or two full revolutions. Retard the throttle to about 1/4, add the glow plug battery, and flip hard backwards through compression. This will usually cause it to fire and start running forwards. We'll advance the throttle to full before removing the plug battery. We'll start adjusting from there, as the engine can handle or needs it.

We won't try to adjust the idle mixture (air bleed) until we have reliable full-throttle running.