The mag side is under the cover on the left side of engine. The key fits into a slot on the crankshaft. When you go to slide the mag into place, it also has a slot that fits over the key. This is to make sure that there is only one way for the parts to fit, making it impossible to make a mistake. The key is smaller than your little fingernail.
I would leave this alone for now and work on the carb. Because you mentioned the gas at your carb, I'm thinking that you are getting that extra gas going into the intake when it's running. The float is like in your toilet, when the water level goes low, the ball drops and allows more water to enter. The carb is just the same but a toilet is built much better. (I just had to get a dig in at these kits)
With carb apart, you will notice a little brass lever that moves up and down. The little plastic float pushes up on the brass lever as the bowl fills up with gas. The lever can be bent and a general rule is that it should be level when it is raised up all the way.
If this is hard for you to understand , go over to your toilet, take the tank cover off and push down on the float or ball until it's below the surface of the water. You will hear the water entering the tank until you let go .