The old Fox .35 is a plain-bearing (not ball bearing) engine with an iron piston running in a Meehanite cylinder. You should break it in using fuel that has a high oil content (25-30%) and uses mostly castor oil. I broke all of mine in using Fox Superfuel (29% Castor / 5% Nitro) which was originally designed specifically for this engine, if memory serves me correctly. Fox still manufactures Superfuel and it should be available through your local hobby shop.

As far as breaking one in, it is best to run it on the bench for 30 to 45 minutes running time at a fairly rich setting (rich 4-cycle). Run it for 3 to 5 minutes then let it cool for 15 to 20 minutes then run it again. They do take a long time to break in by today's standards but it will last for a long, long time if run on Superfuel. I've yet to wear one out.

There should be an aftermarket muffler available to fit the Fox .35. One using a screw-type strap would work fine as it is quite noisy without the muffler. Would probably upset the neighbors to listen to that thing running for several hours!