No joy.
I fired it up today at lunch.
First attempt was the same, but then I saw that I AGAIN allowed the diaphram to twist out on installation.
Pulled out diaphram #2 and installed being even more careful this time.
Installed and fired it up.
No air between the regulator and carb this time so looks like problem solved.
There was LOTS of fuel comming out of the muffler but I think that was from when my diaphram was installed wrong since it stopped later on.

But I still have the same problem, I get up to half throttle and it dies suddenly. No girgle, no spudder, dies.
I tried turning the regulator out a turn or two as well as opening the needle to 3 turns but still no luck.
If I turn past 3 turns on the needle, the o-ring seems to show.

Pictured is how I set the timing. Dot on the cam is straight up and the two notches are aligned. I pulled off the cam cover to verify this (put a sharpie mark on the opposite side of the dot since the lifter covers the dot right now.

What else should I look at?