RE: Whats wrong with my nexstar's engine?
Ship the whole plane back to where you got it and Hobbico will replace the whole thing free. Tell them the problem and get a good one. The engine on my first one was better than yours but still wasn't right and ran very hot even with it being rich. I am not a newbie so take my word for it, I have worked on many RC engines and yours is crap. All the advice your getting isn't going to fix it. Why should you be bothered with it. It's Hobbicos problem!
Gibbs