Loss of power in a small Onan engine.

It's a 23 horse 2 cylinder air cooled Onan NHC engine in a Deere skid steer. A while back I posted on here about the problem. The engine has 2 separate exhaust headers and 2 mufflers. When running the engine at night, one header gets red hot within 30 seconds and a steady blue flame can be seen in the muffler. I followed advice on here and checked the exhaust valve tappet clearance. I could not get a .004 feeler gauge to slip between the valve stem and the tappet. The proper clearance is .012.

That was the problem. The exhaust valve was not closing when it should. There was an adjusting screw, and I turned it as far as I could before it bottomed out. The clearance was .008 and the engine ran good for a few weeks.

Now I have that problem again. The valve isn't closing all the way and flames are coming out that cylinders exhaust. The adjusting screw for the exhaust valve can not be turned any more. It's the top valve in the picture. The bottom valve is the intake, and you can see where there is room to adjust that valves clearance.

What should I do in order have the proper valve clearance? I thought about grinding off about 1/8" of the valve stem, then I would have some leeway with the adjusting screw to get the proper gap.
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You could have a valve seat getting soft and wearing or it may be loose and hammering it's way deeper into the engine block. either way you need to stop it soon as possible and tend to it. Onan parts are almost unbelievably high and you don't want to do any unnecessary damage to it.
 
Grinding ends of valve stems for lash/clearance when doing valves and seats was a known procedure for Tecumseh and Briggs small engines- also done on Harley side valve restorations, Ford Flat heads and some overhead valve engines like some jeeps and Continental tractor engines. The problem of minimal lash on many of the small engines sort of started for many in mid 1970s when unleaded gas became requirement and valve seat erosion became worse. BMW motorcycles /2,/5,/6 series designed for leaded gas had a rally demonstration display at Dells rally 1980s with examples of badly eroded valves. The 4000 mile adjustment schedule was reduced to 2000 miles and some people had filed end of valve stems to get proper clearance just to make it through end of riding season. Check for valve seat material- the old iron seats that were good for leaded gas need a harder seat now for unleaded- look for Stellite seats or something similar- couple other names out there indicating higher nickle and chrome content, might be called stainless steel seats. Ford N tractors supposed to have used Stellite seats some from factory, Onan might have a LP gas valve seat spec number available. RN
 
Sounds like the old BD 264 engines in the IH trucks. They would cup the valve so much you could put a teaspoon of water in the top side of the valve head. Once this started after few thousand miles, readjust the valves and run good for a few days and then same thing. IH fought that problem for years. It basically was caused by over loading, lugging the engine. We even put a plate in the manifold blocking off the heat to the intake and that helped until it burned a hole in the plate. Got the guys to buy a 304 V8 and problem over. You will no doubt need new over size seat, new valve and guide. If stellite valve is available I would go with that.
 
To see before taking it apart, measure the installed height of the valve springs, I bet they are almost .100" different. Leading to cupped valve head, or pocketed valve seat, as noted. Jim
 
You need to pull the head and check the valve seat.Very common for them to eat into the block. As they come loose and move around.

Onan tech since 1980.
 

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