Try this:
Get the engine started on the ground, and set the needle right at peak. Then push the needle in varous directions, but don't turn it. If you hear RPM changes, the o-ring isn't sealing. Put a bit of fuel tubing over the needle to help seal out the air. It's a "standard" thing I do to my Magnum engines to fix mixture funnies. OS engines usually don't need this, but it can't hurt.

When the engine is running, do you see air bubbles in the line before the needle valve or between the remote needle and the carb?

You might have an air leak in the carb. When you installed the carb, did you really push down on the carb as much as possible before tigtening up the screws? You really want to compress that o-ring.