The K&B needle valves leak air by the black sinch nut thru the threads on the needle- take the nut off & put a small dab of RTV/silicone seal on end on the brass part that the needle screws into....the plan here is to seal up the threaded area of the needle valve & not leak air into the fuel stream upsetting the mixture. Usually, the threads of the small fuel fitting threads leaked also needing sealing also.
Water Bench test: take carb off the motor;
put a length of fuel line on the carb;
put the carb under water (in a bucket);
pressure in the fuel tube (breath) will show air leaks in fittings, needle valve threads etc...
pinch seal both inlet/outlet sides of carb-
Back in the day when running my OB3.5 KBs, I would carry some prepped needle valves in my tools to give to guys having your problems & that cured things up usually... MAGIC!!!!
Also, after some problems running 50% nitro fuel, I went to 40% nitro & the motor ran very well with little noticeable difference in performance ....motor/boat was happier & I was too...
Nice boat/motor - one of my 'Keepers' from those days...I still have it... hope this helps...
Thanks-
Dave Richardson
RPMInc (ret)