While I am getting all my problems aired, here is another for the panel of experts.  I have a 40th anniversary Fox stunt .35 that has had 1/2 to an hour on the bench.  It has a Fox supplied ABC P/L set and it feels good when turned over.  I fitted it into a vintage design where the motor is totally out in the breeze (no cowling).  It will hold a 424 setting in flight if open faced but if I fit the supplied muffler, it quickly goes into thermal runaway, no matter how rich I set it on the ground.

Is this a problem that can be cured?  Due to noise issues and a new flying site, I would prefer to use the muffler if possible especially since the plane could use a little nose weight anyhow.

The OS 35/40 FP muffler will also fit the 40th anniversary Fox 35.  I think the OS muffler is more restrictive however.   The Fox muffler is not only heavy, its ugly, muffles poorly, and doesn't fit anything all that well.

I agree with Alan.  Sounds like it still needs time for fitting in. 
I have never used a Stock Fox muffler, only aftermarket ones.
The oil content is also critical on a Fox 35.  Larry Foster recommends no less than 28% castor and 15% nitro.  Higher nitro actually helps to cool the Fox 35.

Magnum XL .25, .28, XL or XLS .32 and .36 also fit. Not as big (or effective) as OS mufflers, nor as heavy, but pretty useful. ASP's are the same engines, and may be more available in Oz.  Steve

You can bore out the exhaust hole in the stock muffler, or drill 3/32 in. holes around it.  the stock muffler isn't much more than a restrictor and doesn't muffle all that well.  With enough additional holes the back pressure will go down to where it will run and not overheat.  Additional noise will be minimal.

How big a prop?  You might have better luck initially with a 9/5 to reduce the load on the motor.  It still should fly most old timers just fine.
 
Also take a close look at the fit of the front bearing.  It may be a touch too tight.  I had one 40th that never, in about 50 runs, ever break into a 2 cycle.  It would start nice in a 4, fly fine as long as it stayed in a very fat 4, if it ever leaned out is would just start sounding funny and quit.  the only thing I could ever see was that the main bearing was too tight.  Maybe someday I'll fix it.

Charlie,

I'm curious... You started off by describing your engine as fitted with the factory ABC P/L. Seems most of the responses ignored that. I hope the Fox factory instructions take account of the different oil needs for ABC top ends...

The main bearing is not the reason Fox 35s traditionally need ~28%+ castor: the leaded steel sleeve and Meehanite cast iron piston pair is.

Conclusion? You could certainly get by with a 10%nitro/22%castor/3%synthetic fuel, and possibly with the universal modern ABC/AAC/ABN juice: 10%nitro/11%each castor & synthetic.

Castor delays the break-in of a well-made "ABC" type P/L. The working bits need to reach designed temperatures to expand to the optimum running fit. Castor carries away heat, as it (usually) won't burn at our running temperatures.

Castor also tries to deposit scorched oil on the piston, at least. Again, this is counter to the intention of the "ABC" top end. CLEAN surfaces, running at proper temps, is what they are intended for.

Now, I haven't run a factory fitted ABC Fox 35, so it may be worthwhile to see if this idea has been tried, and if so, how well it worked. I have heard good about the Fox 35 ABC - lower vibration, particularly.