I started the mower again this afternoon just to be sure that my final settings are right, I found that for a cold start I followed the following steps:
Move throttle to 1/2 way position.
Place mixture knob to setting 5.
Prime carb until fuel just starts to drip from air filter.
Pull start rope briskly.
Once engine starts allow to run for a minute and then move mixture knob back to setting 3 for normal running.
I have found that I needed to richen the fuel mixture back to setting 5 just for the cold start, once I fit a belt I may have to make some small adjustments for running on the main jet under load.
I also found another exhaust that the previous owner must have struck the same issue of oil splatter and made a very easy modification to the outlet
It looks like a piece of copper blocking off a few holes and held in place by the end nut, may even quieten it down a little as well.