Jason, the tappets should be set between .04mm to .10mm. My 91 and 70 both have the dots on the cam that you aline at TDC for correct cam timing. If the engine was in A crash there may be A bent needle valve or the O-ring may be worn, this could be on both the high and low ends.
My .70 was doing something like yours and it was fixed by buying A new needle valve assembly.