Long story short, I rebuilt the pony on the D2 (4U1826) and when I reinstalled onto the diesel engine, fired up fine but was overheating. Pulled it back out and tore it back down to make sure all of the ports were clear. I suspect the problem may have been air trapped in the manifold because I didn't find any blockages. Reassembled (all new gaskets) and reinstalled last week. When I tried to start, wouldn't even pop. Swapped plugs on the coil just to check and still nothing. Pulled #1 plug and plugged it into the wire and laid on the fender and cranked and had spark. Opened the bleeder valves for both cylinders and had fuel come out of both. I was certain the timing was correct, and I had photographed the gears before reinstalling the cover, so I double checked the photos and confirmed the gear was on the crank properly and the camshaft and crankshaft "C"s were lined up. Double checked mag and that was lined up also, so timing looks good. Double checked the points gap and it was about .015 - .016. This is an American Bosch mag and I believe specs for that are between .014 and .018. Opened up the bleeder valve on #1 cylinder and cranked and it blew fire out of it. Had my wife crank it while I was on the right side and heard backfiring in the pony air cleaner. Pulled the pony and diesel intakes and cranked, and had good pressure coming from both exhaust ports and occasional backfire through carb, a couple of times with impressive flames. What am I missing?

Plug wires maybe switched???

Jim - I did swap the plug wires and no change.
Neil - I was thinking about removing the plug and putting air in the chamber at TDC to see if I could hear air coming through the carb. I did remove the camshaft, but I've checked the timing and everything looks correct (see photos below).

The pony did run OK but it was overheating? In correcting the overheating problem, the timing problem occurred? Doing what Neil suggested should isolate the problem but it sounds like maybe the timing between the cam and the crank is off 180 degrees, Why would I suggest that except been there done that. The crank can be rotated 360 degrees and the marks will still line up with the cam gear. But if the pony was running beforehand and the crank gear and cam gear were not disturbed, that could not be the problem. The pony will get hot if the main is not turning as the only water circulation in the pony is from the water pump on the main.
Bruce you will undoubtedly be the pony expert after your pony rebuild.

D4Jim wrote:

The pony did run OK but it was overheating? In correcting the overheating problem, the timing problem occurred? Doing what Neil suggested should isolate the problem but it sounds like maybe the timing between the cam and the crank is off 180 degrees, Why would I suggest that except been there done that. The crank can be rotated 360 degrees and the marks will still line up with the cam gear. But if the pony was running beforehand and the crank gear and cam gear were not disturbed, that could not be the problem. The pony will get hot if the main is not turning as the only water circulation in the pony is from the water pump on the main.
Bruce you will undoubtedly be the pony expert after your pony rebuild.

if this engine is a twin cylinder....if camshaft (or crankshaft) is out 360 degrees, wouldn't that just swap the firing order?

-overheating...not enough coolant circulation, improper spark timing(usually late), carb too lean of mixture...exhaust restriction...maybe more possibilities...

-the title of the thread is pony backfiring... i assume that's back thru the intake and carb? 90+% of the time...that is too lean of fuel mixture...too lean also creates a very hot burning mixture, raising cylinder temperatures...another red flag....

-double check you are getting plenty of clean fuel (filtered) to the carb inlet...and no obstructions thru needle and seat....and proper float level...

-can you post a picture of the spark plugs....the current plugs you are using?

Thanks to everyone for your replies. I did record an attempt to start with the exhaust and intake tubes removed, and just posted it to YouTube at this link - It shows a couple of backfires but there were a couple with pretty good flames before I did the video.

Neil - Thanks for checking on the sequence on your tractor. I hope to be able to check that sometime this weekend.

Jim - I did pull the crank and camshafts out. I was concerned about the clearance between one of the cylinder walls and rod, and wanted to file the edge of the cylinder wall down a little. I'm certainly getting very familiar with this pony, but you guys are the experts.

Kittylover - I pulled the cover from the bowl on the carb and it had fuel up to the jet, and moving the float allowed fuel to flow and stop. Also poured a capful of gas down the carb throat and nothing. Last time I installed it, had a similar problem and it fired when I did this. Found the problem to be mud daubers clogged up the fuel inlet to the carb. I did rebuild the carb over the winter, so it's entirely possible it could be out of adjustment, but it ran fine about a month ago. I'm using Autolite 3116 plugs. Photos are below.