Rod is OUT when engine is running.
Cold start procedure is to push in kill lever.
Advance throttle to full open (max speed).
Push in button on lever pivot. (I always heard a distinctive sound "TINK")
Start engine and pull throttle back as soon as it fires up. (you can move it to half throttle before you start it to avoid over rev-ing of engine).
Mine always has a rubber cap over it to protect it.
The sound was the fuel rail advancing to max output.