Well if all is well with the valves, I would check the flywheel key. From your narrative I see no reason for it to shear but sounds like it. You should be able to remove the cooling shroud, flywheel screen, flywheel nut or bolt and look down the keyways to see if they still line up.

Walt Conner

Wow you nailed it on the head, Thanks Walt !!!! I checked it out and the key is sheared for sure. My local parts store is closed today but I will be getting 2 or 3 of them tomorrow. what makes the keys shear like that ??? is there something that i should be looking for ??? Thanks again Walt.

One scenario that will cause a key to shear is if the engine has any liquid fuel standing in the cylinder when you engage the starter.
The liquid fuel hydrolocks the piston and the key can shear (or bend) because the starter drives the crankshaft by means of the flywheel.
Typically, if a key shears, that indicates there was insufficient torque of the flywheel retainer nut (or bolt).
On your engine that torque value is 100 ft lb.
Both the flywheel and the crankshaft surfaces must be clean (solvent clean) and dry.
Use ONLY the genuine Briggs brand key, not a "generic key" that is found in an auto parts store.
The Briggs key is designed to be a crankshaft safety item.
Too strong a key and the crankshaft will torsion twist the next time the key is stressed.

As Mownie said. Often the flywheel nut/bolt were not properly torqued or tapper of crankshaft or flywheel not clean and dry, most often the first.

Walt Conner

Ok new problem. Replaced the sheared flywheel key, put it all back together and it started fine. seems to run pretty good, but now the exhaust pipe turns cherry red after about a minute of run time. I removed the muffler in case of restrictions and it does the same. I checked and rechecked the valve clearances and am pretty sure they are right(.003 intake .005 exhaust) any ideas ???

If you are looking at the exhaust pipe/muffler assembly, in a darkened area, yes, they will have a glow to them. That is normal. you won't see that in bright sunshine, or during normal running hours. They really show after dark!
RJ

I disassembled & re-assembled a Briggs and Stratton Intek OHV 18 1/2 HP Engine Model # 31P777, Type 0367E1, Code 050405ZA

I made sure when I re-installed the Camshaft that the dot lined up with the timing gear dot.

The Piston & connecting rod where not touched

Made sure that the push rods are in their correct locations.

After the engine was re-assembled I observed:

Turning flywheel CW by hand where magnet lines up with Coil Magneto, both valves are closed, which makes sense.

Turning flywheel CW by hand one full rotation where magnet lines up again with Coil Magneto, intake valve is open & exhaust valve is closed, which does no look right.

With intake valve open & exhaust valve closed the spark will now cause the engine to backfire.

How is it possible for that to happen?