What do you mean the valves are not loose? Did you actually check the clearances at TDC of power stroke? Checking and adjusting the valves needs to be done on a cold engine.
0.003–0.005 inches (0.08–0.13 mm) for the intake valve and 0.005–0.007 inches (0.13–0.18 mm) for the exhaust valve
I meant the rocker arms oops, my mistake. And yes I checked the valve clearances at TDC of power stroke and both valves were within sepc.
As for what slowmo asked, the key is OEM and I got the key in accordance with the illustrated parts list, the airfilter is a brand new OEM filter in accordance to the parts list. The carburetor is clean, I took off the sleeve thing of the jet and nozzle assembly and cleaned out the emulsion tubes, the thermostatic choke works correctly. It closes all the way when the engine is cold, and opens up all the way as the thermostat heats up, no binding of parts or any other malfunctions in that system. For the max RPMs I couldn't ever get a good reading as the engine was constantly running poorly with the A.F. assembly on it and I didn't think to check RPMs until it was running fully assembled. And when I was testing out the engine speed, it was over an area of low grass, so nothing was being cut.
I also asked the Husqvarna helpdesk if they had any ideas, the person who answered said that due to the engine speed bogging down when the A.F. assembly plate was installed, it could possibly be the crankcase breather was malfunctioning, which when I inspected the breather assembly, the reed valve was in good shape, it wasn't stuck open on any debris that could have gotten in, nor was it stuck shut from anything either, and the drain hole looked to be open from what I could see, the breather tube itself was clear of obstructions. The Husqvarna rep also said that since there is white smoke coming out of the C.C. breather tube that it could be either: 1. Worn rings, 2. Leaking carburetor, or 3. Too much oil. I know it can't be too much oil as I did an oil change and made sure to measure out how much I put in the engine. Can't be a leaking carburetor as without the A.F. the engine will run fine and if it was a leaking carburetor it would run poorly constantly. So maybe the rings are worn and there's so much blowby that it's agitating the contents of the crankcase and that's what's causing the smoke from the breather tube? However, if it's bad rings, wouldn't my compression tests be reading low? I'm a bit lost there.
Included pictures are of the C.C. breather assembly and the chamber. I had the reed valve removed to inspect the assembly.