Small Engines (Lawn Mowers, etc.): B&S runs but has a constant miss, crank shaft, dana dana

Question
This briggs has no numbers on it. It's a horizontal shaft and I have a vertical shaft that has the same bore and stroke and it is a 3.5HP model # 92502 type 3161-01 ser# 90022822. The exhaust valve was broken and I replaced it and got it running but it has compression coming out the carb and you can smell raw gas. I thought it was out of time because there is a large bearing on the crank shaft that covers the timing mark so it is stamped on the weight on the crank shaft. The timing marks on the crank and cam shafts are both at the V. The mark on the crank should be at a tooth. I put it together with the crank mark on both sides of the cam mark and it made no difference it still misses. Next I checked to see if the valves were leaking. I took the head off and blew thru the carb and air was hissing past the closed valve. I am assuming this is what is causing the miss. Am I correct? I assume if I reseat the valve it should run right. I blew thru the muffler and the new exhaust valve was tight. Another thing, it smokes a lot. When I took the head off after it ran a while the piston and under side of the head were covered in oil. I had the gap in the rings staggered and then noticed when I rechecked that there was about 1/8 inch gap where the ring meets on all 3 rings. Is that too large of a gap? The top ring has an inside corner ground off. Does that ground off corner go up or down? My cousin said that has something to do with keeping the oil from going into the combustion chamber.
I noticed on both engines that the intake valve doesn't completely close till the piston is more than half way up in the compression stroke. That seems odd to me but I guess that works when it runs. Thanks for the help David.  Dana

Answer
Dana,

B&S Engines are designed differently from Verticle to Horozontal shafted  Modelsthe real difference is the Cam rise and the CuInch of the blocks mainly to the naked eye they do look dead on alike but in truth they are not on a Horizontal Engine the Piston requires less rise then it would on a verticle shaft. the difference is about .0125"
However I am gonna give you a link to the B&S Shop Manual it has the same Model as your 3.5HP Vert Shaft It contains an Exploded View of the Internals and extrenals with Part Numbers at the Bottom
The reccommeded Valve On Intake is PN#296677 Exhaust PN#296676
the Intakes are different in size between both engine models
Your Engine  Compliance Is listed in this manual Link Meaning it is a Verticle Shaft Engine The parts you Used Is listed as a Non-Compliance Engine From Type :5105
cut and paste Link download the Manual use adobe to open it:
http://www.briggsandstratton.com/pdf/illustrated_parts_list/100/MS8201.pdf
the reason your getting smoke is your cousin is right about the rings the ring that has a corner notch facing down is incorrectly installed the notch should be In the Up Position Ring Sizes should Be as Follows: .010" .020" .030" All O.S. OffSet
to stop the smoke issue open the top end up and take a rag with some gasoline and wipe the excess oil from the top end dont add too much fuel to that rag becasue doing so will cause the oil from the cyl walls to degrade just clean the top end.
Take this guide and use it every Small engine shop uses this same manual.
Dana Another thing It is perfectly normal for the Piston to be a bit more then 1/2 way up before the valve closes on the compression stroke but a good rule In the Business is at 1/2 way the valve should be just closing.
Your problem is the Intake valve is a bit too Long for that Type Of Engine to correct it get the right valve and install it.
I hope this Does help you understand that just because they look alike does not generally mean they are alike. :)