I spent a couple of hours doing some troubleshooting. I did hook up a gravity feed for fuel and at first it started and ran fine. Sat for a little bit and started flooding out again. I purged the extra fuel from the intake and combustion chamber and started again with the gravity feed. Engine stayed running. So immediately I thought carburetor float/needle/seat.
What is interesting is while I had the engine running the last time with the gravity feed if I moved the fuel line a tad, the engine would go to stall and start smoking black. Granted there was some air bubbles in the fuel line but I need to check to make sure there's not an electrical problem with loosing spark. I did take apart the carb and inspected the float (no holes), needle and seat with very low air pressure. Working the float open and closed sometimes it would seat (no air escaping) and other times I'd hear air passing. The seat does have some corrosion inside and I've already replaced the needle and gaskets.
So my fuel issue is down to carb, but I'm going to rule out any electrical issue with me moving the fuel line. Looks like the seats are replaceable (12 521 04-S, list price of $30). I can get a whole new carb on ebay for $98 with free shipping. Are the seats easy to replace? I do have one walbro carb tool kit so I'm guessing I'd need a special punch to install and tap to remove.
I also changed the oil with a blend of 10W-30 and 5W-30 along with the filter (which looks like it was never replaced). Engine seemed to run a lot smoother; better yet, no valve train noise
. Did a leak down test also and have a compression loss of about 20% so I know the engine is good and valves are OK. I'm giving this tractor to my father-in-law so I don't want it coming back to me haha