The carb float needle is not shutting off the fuel
The fuel fills the float bow and eventually pours out f tha bowl vent which is on the engine side of the carb
Because the carb has a slight downdraft the fuel flows bown the manifold past the inlet vales and into the cylinder
Fron then it drains slowly past the rings and fills the sump, diluting the oil and overfilling the sump
When the piston goes down it compresses what ever is in the sump and forces through the crankcase breater tube that goes into the air filter .
A very very very very very very very very common problem