It's normal for the O.S. FS-61 to spit fuel out of the carb at low throttle, especially if the fuel level is above the needle valve. Otherwise, you may have the intake valve leaking a bit. If the valve clearances are correct, then you may need to replace the head and valves. Usually both go bad at about the same time. Your timing setting is correct.

For valve lash, you need a 0.04mm feeler and a 0.10mm feeler. Rotate the engine until one valve is fully-open. Then set the other valve's clearance. The thin feeler fits and the thick one doesn't. Rotate the engine until that valve is fully-open and then set the remaining one.