It appears that the needle is plumbed backwards. It looks like the fuel line from the tank comes in the bottom and out the side. The fuel should flow down the needle from the fat end to the tip. Also, this motor is the CAM, not the RS. The RS has a disk rotor, the CAM a drum rotor, as previously mentioned. Another possiblity that was previously mentioned is bad bearings. Bad bearings allow the crank to break the oil seal at the front of the crank. If the bearing is too loose, the crank will hit the housing, and damage the seal bore, causing an air leak. If the crank has hit the seal bore, the case will need to be replaced or sleeved with a bushing.