creel,
125 on both should be good I would think.
When you say there is an oily substance on the cavitation plate, where does it look like it's coming from?
Does it seem like it's being discharged from the exhaust?
Have you checked the gear case for leaks? If you pull a gear case filler plug, is the oil milky at all?
If it isn't that, it's probably just either running rich, or it's blowing out carbon and crap.
After you run it, have you checked the plugs to see what they look like? Normally if you have some kind of ignition issue on one plug, it will look different then the other. One might be all fouled, or might look like it's never been fired etc.
Also, it sounds like you guys cleaned the carb, how did you set the jets? If you have a good service manual, it will normally tell you to screw them all the way in and then back them out a certain amount like a half or three quarter turn as a starting point. I usually find if I set them up that way, the motor just usually needs a small adjustment here or there and I'm good to go.
Whenever I have issues, I always try to go back to basics...fuel, air & spark and it should go.