Did you try turning 1/4 past TDC and setting due the ACR? (compression release lobe on camshaft?
Here is the valve adjustment procedure sent to me by tinkerer200...a poster here...
Remove the valve cover. Remove the spark plug and turn the engine to TDC
Turn the engine in the normal direction of rotation, clockwise, watch the rocker arm action to determine when the Intake Valve, the bottom valve, has just closed. Use a wooden Dowel Rod or pencil, eraser end first, in the spark plug hole to feel when piston is coming up and then at top dead center (TDC). Put a mark on the dowel rod using a reference point such as the outside of the spark plug hole. Remove the rod and put another mark ¼” above the first mark. Re-insert the dowel rod in the spark plug hole and continue turning the engine until the piston has receded to the SECOND mark you made on the rod. This will give you ¼” down past TDC. Both the Intake and Exhaust valves are adjusted at this point.
I recommend removing and reversing the Intake Valve Push Rod when adjusting
the valves. If you remove the Aluminum Intake Valve Push Rod, you will see a
worn area down a little ways from the Rocker Arm end. This is from riding on
a fiber support rub block and the aluminum push rod will eventually bend or
break. Both ends are the same and reversing will prolong the life of the
push rod.
As an added precaution, I would check that the Rocker Arm Studs are tight in the head, Torque to 85 inch lbs.
The proper setting is Intake Valve - .003 - .005”, Exhaust Valve - .005 -
.007”. Loosen the locking screw in the middle of the adjusting nut first.
Use a flat feeler gauge between the Rocker Arm face and the Valve
Stem. These settings are critical as the Intake setting controls the operation of the Compression Release. I usually have to make 2 - 3 attempts before I am satisfied with the setting. When you think you have the proper clearance, take a hold of the Rocker Arm and move it by hand, side to side, etc, as much as you can and recheck the clearance
setting. The nut must be held while Locking Screw is torqued to 45 inch
lbs. You will need a Torques Head screw driver bit for the locking screw on tappets. I would also check to see that the Rocker Arm Studs are still tight in the head, they sometimes work loose I recheck the clearance setting again here. I would re-torque the head bolts while you are there.
Note: IF you remove the push rod or any other rocker arm components, there
is a cap that sits on top of each valve stem, take care that you do not
dislodge and lose the cap. It is between this cap and the rocker arm that
you actually take your clearance reading but you will not notice there is a
cap normally. (Apparently, from the Overhaul Manual, ALL engines do not have
this cap)
Replace valve cover with new gasket, torque valve cover to 60 inch lbs.,
replace spark plug.
Walt Conner
To see if the compression release is working on B&S engines 28, 31 and 33 series OHV, remove the spark plug. Remove the valve cover, turn the engine flywheel clockwise while watching the valve action. When the Intake Valve closes, stop. Now focus very closely on the valve spring retainer of the Intake Valve, continue turning the flywheel clockwise. In about 1/4 turn, you should see the Intake Valve Retainer (and valve) make another little move towards fully closed. This indicates the Compression Release is working. IF you see no movement, try again. Still no movement, there is a problem in the Compression Release system. When the engine is cold, you can rest the side of your hand on the head and grasp the Intake Valve Spring Retainer between you thumb and index finger while turning as described and you should be able to feel the Retainer move.