Toyota Repair: 1986 corolla failed emissions, high CO, emissions test, o2 sensor

Question
Problem:  Failed Colorado state IM240 emissions test for high CO

sypmtoms:  25 mph, VERY hard starting when cold, now (just happened) burns oil (blue smoke).

carb was rebuilt/remanufactored before i bought the car a few months ago. spark plugs, wires, cap and rotor brand new, air filter brand new, o2 sensor brand new.

it is a 1.6l 2 barrel carb.  i am a ford/mazda tech so i know my way around a car but i know nothing of carbs or toyota.  i know high CO means i am running rich.  i cant find any way to lean out the carb.  i found an old TSB that talked about drilling out a plug and backing off the mixture screw or something like that, but its a rebuilt/reman carb so i dont know

Blake


Answer
Since carburetors have been long gone I have to tax my small brain to come up with something that may resemble a solution.
You said that it's very hard to start when cold, have you checked to see if the choke closes all the way when cold, remove the air cleaner top and step on the accelerator once, the choke butterfly should close, does this happen?
If the choke was stuck closed it should not have a hard start condition but it would cause a rich condition if it doesn't open after the engine warms up, verify that the choke opens after warm up. Blue smoke, as you know is caused by oil burning but it will not cause high CO even though here in california excessive blue smoke is a reason to abort the test and fail the vehicle.
There are only two things that cause high CO, too much fuel and too little air, could be caused by a extreme restriction on the intake side(doubtful) or on these older models, a carburetor problem, check to make sure that the secondary butterfly in the carburetor is not partially sticking open, make sure the egr system is functional. Let me know if I can help more.