In theory the ignition timing can't be changed, since it is set by the magnet on the flywheel and the flywheel is on a key that locks it to the crankshaft. On the very old engines with breaker points you could vary the timing a few degrees by using the wrong point gap: increased gap advanced the ignition, and reduced gap retarded it. However many breaker-point engines had slots in the point set so the timing could be adjusted.

One point needs to be clarified: did you check the spark with the spark plug connected, or did you hold the plug lead close to the cylinder head and let it spark from the lead to the head? If you have a defective spark plug, or much too small a plug gap, that could be the problem.

Joe suggested that you inspect the side of the piston through the exhaust port, in case it is scored. Scored pistons do not control the ports properly, giving the effect of incorrect valve timing. I suggested that you try to start the engine without the muffler fitted, in case the muffler is choked or has a loose baffle. Did you try both of those things?