One question -
The linkage from the governor to the throttle on the carburetor.
Some had a lock that held them at idle until one engaged the clutch and released the throttle linkage.

Ensure the linkage is allowing the full opening of the carburetor butterfly. Double check the operation of the choke and main butterfly. Not something that would be unheard of, butterfly loose on the shaft or linkage not allowing it to function.

Be careful, I see danger written all over your procedure of feeding raw gas from a can or container to the intake of the carburetor. Accidents do not happen, they are caused, so don't set yourself up for a serious burn!
Feeding fuel to the intake side says YOU HAVE A FUEL SUPPLY PROBLEM.
Those small engines are gas guzzlers, no economy mode there!
cts

One question -
The linkage from the governor to the throttle on the carburetor.
Some had a lock that held them at idle until one engaged the clutch and released the throttle linkage.

Ensure the linkage is allowing the full opening of the carburetor butterfly. Double check the operation of the choke and main butterfly. Not something that would be unheard of, butterfly loose on the shaft or linkage not allowing it to function.

Be careful, I see danger written all over your procedure of feeding raw gas from a can or container to the intake of the carburetor. Accidents do not happen, they are caused, so don't set yourself up for a serious burn!
Feeding fuel to the intake side says YOU HAVE A FUEL SUPPLY PROBLEM.
Those small engines are gas guzzlers, no economy mode there!

To clarify - so we are all on the same page --- The transmission for the starting engine to the Diesel Pinion -   LOW or HIGH -- determines the speed of the pinion at the ring gear.
Secondly --- Compression, OFF, HALF - FULL   (this determines the valve settings in the diesel - I have never used half - usually for very cold conditions)  You want to ensure Oil Pressure and Fuel pressure are up in the green, then go to full, warm it up for a bit and then open the fuel to it.

Where are you finding Spark settings --- I do not recall anything that adjusted the magneto timing after the initial settings.   Impulse takes care of the retard/advance during cranking and engine start.?

There is nothing wrong with a very light-quick shot of starting fluid to the air cleaner intake when you hit the fuel.   DO NOT OVERDUE IT!  
If you are marginal on heat in the cylinders, this will make a difference!
cts

This one does have that lock and I had it engaged, did not auto release though which is what I was meaning by pony running it able instead of full speed. Sorry new to this stuff and mixing up terminology frequently haha. 

I have no intentions of leaving it as needing fed fuel from the intake side, only was trying that to get it off his trailer. Would do me no good to need multiple people to start the machine. I also forgot to mention the carb has no gaskets. Between upper and lower carb body or carb to header pipe side. There is a gasket I bought for the air cleaner attachment. I'll build gaskets tomorrow when I redo my cleaning but that could also be the culprit. 

*idle not able

I followed that procedure pretty much fuel off for the diesel pony running (feeding it fuel) while on low not high, then half, then full then turned some fuel on to the diesel. Dropped back to half when it didn't start etc. Just didn't switch to high wasn't sure I could do that while it was running so played it safe.

See attached photo for what I am referencing for the manual spark and the idling latch. Sounds like the idling latch should automatically unhook when running but didnt and that was why the pony may not have been putting out enough for the diesel to turn over.

Just a question have you removed the little filter inside the fuel tap bowl that feed the carbon, as they are almost always blocked and restrict the fuel flow

Regards

If you are referring to the glass bowl right off the gas tank I have pulled that assembly apart and cleaned it all, but don't remember there being any actual screen/filter in it.

Gaskets at the carbuetor bowl and all points below are not optional- NO WONDER YOU HAVE ISSUES -
Carburetor funciton depends on vacaum and if there are no gaskets, you have no vacaum.
I have in many cases used "cereal boxes" for gasket materials - not ideal but that will do in a pinch. Sometimes a season's worth!

Half on the compression release - Unless you are in very cold temperatures, I would not consider it -- When you go to full - wait a short bit of time, give it the fuel, should run, especially if you have the starting engine running above and Idle. Gearbox to the pinion in HIGH.

When you get the starting engine running, engage the pinion with compression released, and open the throttle to the starting engine!

In many cases, and I will try to explain - turn the fuel on to the starting engine, fill the carb - shut fuel off, start the starting engine. Once it starts, open the fuel to it.
Sometimes floats stick sometimes just too much fuel too high in the bowl. Shutting off the fuel helps eliminate that problem.

After your have Diesel Running - shut the fuel off to the starting engine and run it dry. Keep it dry till next time you want to start, eliminates many problems.

I think you have it on the ready side soon, just do not get mad at it and yank on that crank or pull till you wear your self out -- Those Starting Engines are notorious for making a man make a sailor blush and everthing within earshot run for cover!

Gaskets, good fuel flow, open that throttle and you should have the diesel speaking volumes soon.
CTS

Ya I didn't even think about the gaskets until I went back out for a few more cranks and notices a blowing sound with it on full choke. I've been wrenching since I was young but sometimes you forget the simple stuff. I'll get some gasket tomorrow and give the carb and additional clean just to be safe and hopefully be back up and running. The pony motor oil is also on the lower side so I'll need to top that off momentarily until I do full fluid replacement. The operators manual is not great at giving oil types so if you have any recommendations feel free to send them my way.

further on snowfighter's caution comments about raw gas, last saturday I noticed gas dripping from my over-full pony tank on my recently acquired D7E onto the hot diesel and me in a dry field with no fire extinguisher. fortunately nothing happened. I'm installing a fire extinguisher.