Re: spit back
Oily residue doesn't necessarily mean it is "unburnt". 2 stroke exhaust is naturally oily. By "pooling up on top" what do you mean. Pooling where precisely? If "top" is the cylinder head it could be leaking at the spark plug gasket or the cylinder head gasket or stud nuts.
The exhaust manifold gaskets that come in the kits aren't the best. You'd be wise to replace it with a good quality gasket material and checking that the gasket surface on the exhaust flange is flat and sealing well.
If you mean pooling under the carburetor, then do as I suggested above and look for the leak source. Probably carburetor bowl gasket or fuel line, float level too high, stuck float valve or a petcock that doesn't shut off correctly. Some builders have found the plastic donut float leaks and doesn't float. That will allow the fuel level in the carb to overflow. Check the float that it doesn't have any fuel in it.
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