Run both needles all the way in, but not too tight or you will damage needle or seat or both. Good initial adjustment is 1 1/4 turns out for both.

High speed needle is furthest from engine (near choke or air cleaner) and idle needle is closest to cylinder.

Once warmed up set the idle so it is slow enough to disengage clutch, and rich enough to come off idle without stalling or excessive stumble. High speed jet should be rich enough to allow smooth acceleration without stumble, but not so rich that engine "four cycles" at high speed.

Thanks for your reply.

What do you mean - not so rich that engine "four cycles" at high speed?

Do I need to adjust the large lower screw - the one below the needle valves?

"Four cycling" is a description of when the engine runs rich and just begins to miss. Sounds like its now hitting every other revolution, hence the term "four-cycling".

You need to resist the temptation to lean out the mixture and make the engine really "scream". Engine will run too hot, and will probably self destruct.

Although it's not best for emissions (hence the limiter caps), a slightly rich mixture produces the best power and longevity.