Check the rules at your local track. I would recomend The OS .21 VG cheap reliable engine and it's legal for the spec class. You can even run it with the stock pipe just get the header. As far as set up goes try this
Front Diff 50K
Rear Diff 10K
Shock oil 70wt all around
Ride height 7 or 8 front 7,8 or 9mm rear depending on the track surface
Theres a small mod you can do to the stock two speed tranny to make it last longer, or get the new Kyosho shoe type tranny
Xray NT1 '08 /'09 EC LRP12R / Serpent 720 '08 RB Concept V12, R3 RB mods, V12 Rody, Matrix RW / Serpent 733, 733TE RB T9 / EA RC8T OS .21 Vspec speed tuned / Kyosho Inferno GT, GT2 / EA SC10 / Serpent Cobra GT coming soon!