Honda F500 troubles

[cmtul]

The new carb came in today. Still not starting. Went back to checking the points and timing. Pulled the flywheel again, and double checked the opening and closing of the points against the F mark on the flywheel as per the shop manual. According to the shop manual the points are supposed to start opening right as the F mark hits the timing mark on the case. The points start to open at the beginning of the compression stroke, and closes as the F mark on the flywheel lines up with the timing mark on the case. The gap was readjusted to .020. The spark is more pronounced than before. I haven't checked the tappets yet. I figured I'd post this and see what input you guys have.

 

[cmtul]

I pulled the head, and the valve tappet cover off. The head was gunked up with a good bit of carbon fouling. Along with some gummy black carbon substance. I cleaned all of that out. The valve surface was pitted pretty badly. Inside the tappet cover I checked the clearance as per the shop manual. It says the Min should be no less than 0.04mm (.002in), Max no more than 0.12mm (.005in). I have one reading at .127mm (.005in), and the other is reading at .203mm (.008in). Any input would be greatly appreciated. I ordered a tool for removing the valves so I can get a look at the seats, and try to clean them up some if needed. I'll check for leaking before I pull them.

I'm not too sure what else to look at that would cause it to not start. The manual gives the following reasons for hard start:
Clogged fuel filter (filter was clear of any debris and flows steady)
fouled, worn or pitted breaker points (inspected them, and everything looked new. even removed rust from corresponding surfaces of the rotor)
improper ignition timing (double checked this against the shop manual. readjusted them. gained stronger spark)
defective spark plug (replaced it with a new one and confirmed gap)
improper tappet clearance (which is where I'm at now. Could too much of a gap cause the engine to not start?)

Thank you greatly in advance,
Chris