The exhaust gasses passing through the muffler pressurize the fuel tank and push fuel to the carburator. It should not flow back to the tank with the engine running. Check the fuel line on the exhaust for leaks also.
When you cover the exhaust exit the pressure goes directly into the tank pushing the fuel up to the carb. I have to do this sometimes on the first run of the day.
Having the carburtor a bit lower than the tank is fine.
Does anyone know the needle settings that I should start from? Any help would be appreciated.
Doesn't the evolution have a blue anodized stop on the high speed needle? If your does, turn it as much counter clockwise as possible and then start to turn it clockwise until the engine peaks and then richen a few clicks. If the blue stops are gone then turn in until the needle stops and then back out two turns. The stock setting on the low end is 1 1/2 turns out.
You might have better luck with the OS A3 plug. </p>