Thanks for the reply!
Well, I was going to put it back together the other night and found the HSN housing was veryloose, and that is more then likely what is causing my lean condition/engine damage/fuel delivery problem. I think what happend was when I tightend it down to set the base settings, it was slightly loose, so when I was tightening it it turned enough to tighten, then allowed the need to close all the way down, but when I went to open the needle (richen it) the whole hosuing turned out 4 times rather then the needle. So it was getting a ton of air and very little fuel. So I tightend it up and decided to see what I could do with it. I chucked up the crank in my drill and hit it with 1000 grit sand paper, hit the inside of the crank case with the fine dremel bit, polished up the inside of the case with aluminum polish and the buffing bit on the dremel, cleaned the daylights out of the bearings with denatured alky, lubed them all up and everything seems to turn with no problems. I then sent out the piston/sleeve for resizing. For $25 you cant beat it, and the guys feedback on ebay for his procedure is nothing but good stuff.
We will see if it works, if not I am going to go a different route. I already own an 8ight T, and Ofna Mutilator and a Lightning truggy and although the Kyosho is probably the best looking one, it is nowhere near as capable based on its components.
Thanks very much for the info, that is exactly what I was looking for...