Engine will not idle

If the engine is fresh it may have a little blow by until the rings seat but it shouldn't be much. Do you have a pcv valve on one side and a breather on the other so it will properly evacuate the crankcase? I didn't have any problem with my KB's and the wider ring gap. I even set mine looser for using nitrous.

It sounds like something is wrong in the idle circuit of your carb. Have you had the carb on anything else to make sure it works right? What kind of carb is it? Have you tried to adjust the idle screws to see what happened?