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Running at only idle could be bad or ungrounded condenser. Change or clean and reset points. I like your original carb settings, a lot of mine run there, or real close.
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I run about 3/4 ounce of MMO to one gallon of gasoline in my K-301 on a regular basis. I think it helps with upper cylinder lubrication. Having said that, I have never run into any problems with fuel in the engine, even after sitting over a Minnesota winter. The Cub Cadet has never failed to start on last fall's gasoline, nor have there been carburetor issues.
I agree with Mike, and his quote. I think it should, at least, run on those carburetor settings; maybe not well, but it shouldn't quit. I would begin to check electrical and timing issues. If you do change the points, change the condenser, too. There has to be something that is turning off the engine.
Please let us know your progress.
Brian Wittman