Hey Joe;
If you have to back a ST needle valve out that far, you are sucking air through a crack somewhere. Since this a crashed engine, you may distorted the case and it has a small crack somewhere. I crashed a Nobler with a OS .35S one time on the bottom of an outside loop. With the cylinder pointing up, I thought I was looking good and didn't ruin the engine. When I got the airplane home and pulled the engine to check it out, it wouldn't turn over. I pulled the back plate off, and the rod was about half way or more off the crank pin. I pushed it back on and all seemed fine until I turned it over a few turns slowly and watch the rod work it's way off the crank pin again. In comparing the engine side by side with another engine, I could see the problem The impact, even at a shallow angle like 30 to 40 degrees, distorted the case and the crank was out of square with the cylinder> There was not a crack anywhere that I could see, but the case was ruined. I think the only good parts I got out of that engine was the head, back plate, venturi/NVA, and oddly enough, the crank shaft was still straight!! The cylinder liner was distorted and out of round, but in checking the piston with a mic, it showed it was still round. I used a lot of that stuff the put another engine back together that needed those parts. The moral of the story is, the OS.35 -S was like the Fox .35 in that it was a light weight case, and not much meat there to absorb shock and impact. Something is distorted somewhere that is leaking crank case vacuum. That's the only thing that makes sense to me.
Type at you later,
Dan McEntee