18x8 may be a bit large, but it doesn't explain the symptoms here. I think you have a fuel draw problem. The engine runs great when the tank is level with the engine/carb. Whenever you point the nose vertical, the carb now has to draw fuel straight up the distance between the carb and the tank - and it is failing. Thus your ST2300 goes lean and dies. The needles setting doesn't seem to matter probably because the suction at the carb inlet just flat out cannot draw the fuel up.

How far back is the tank behind the engine? Is it up against the firewall? If it is, and you have to use an aftermarket muffler, then you probably have to resort to using a fuel pump. Still, I would put the stock muffler back on and first see if the engine runs good with it.

I've had Italian and Chinese ST2300s and they are all great engines . I still have two, one just came off of a GP Giles 202, and the other is earmarked for a 4*120. The common problem with the ST2300 boils down to the big ol' carb ST put on it. It's the same size as on the 3250 and 4500. It's an old hotrodder's trick for making big horsepower, but transition suffer. This engine is not a 3D engine, even with the stock muffler. For 3D you need instantaneous throttle response and crips fuel metering throughout the RPM range. The ST2300 makes a good sport flyer engine where you don't need to modulate the throttle constantly.