I suppose one should rule out other, obvious, reasons, like restricted airflow, carb/idle needle setting, etc. The symptoms still seem like a rich idle mixture. Trying to combine that reasoning with the change of mounting!

Now you know why people like Mike (who was tinkering with engines when I was a toddler) were scratching their heads more than usual

Should I spill the beans, or we do one more round of educated guesses or diagnostics ?

Just one hint!

Hint ? "What change would you make to a glow setup when you mount the engine upside down ?"

Aahaa....... Let me take a wild guess, Engine upside down means fuel constantly touching the plug, right?? So it will not allow the plug to do it job?? Something on those lines? So fuel flow has to be reduced??

Was this stupid enough???

But the problem was with the engine in the upright position!

That would be classified as flooded, although it is hard to achieve in practice just due to inverted engine mounting.  Remember that after the first couple of cycles of combustion, the chamber gets cleared and pretty much stays so as long as the engine is running.

In this case, the engine was mounted upright. It WAS mounted inverted for the previous few months on another plane though and was working flawlessly then.

Short of - if required - turning the carb around, nothing comes to my addled mind!

OK... let us keep this up until tomorrow morning. Others can pitch in by then.

Sushil bhai  - You are missing something obvious.  You have to run through (i.e. visualize) the process of mounting an engine inverted in your mind  

And as an added hint, think about "choked air supply".

I brought that up as "restricted air supply" !

Right, how can whether an engine is mounted inverted or upright result in restricted air supply (or "more fuel and less than required air") ?

I have a OS .46 mounted inverted and at captains air field , we start it upright or side ways and throttle it up and down a few times , it works all fine . I dont think its with the mounting position of the engine .

What are you doing for inverted mount that we don't do 

I don't do anything special for inverted mount. Never had any problem.

I am pretty sure you all do *it*, and so does everyone else   See this is why we also struggled initially.  It happens so routinely, that we take it for granted !

Anyway, will post what we had to do tomorrow morning.

The problem was the exhaust port/opening of the muffler was pointing pretty much directly to the sky ! 

When the engine was mounted inverted earlier, it was made to point pretty much directly down.  Now that the engine is again mounted upright, the exhaust pipe was pointed up, and although there was NO exhaust deflector that would have made it unusually long, it still caused oil to build up inside the muffler, causing the engine to choke.

Once the muffler post was made to point down again, idle became smooth permanently, and had no problems since.

Wow !!!! a simple thing but it can make you go mad at the field 

Here is a pic of my first nitro plane. I had the exhaust pointed to the sky including an exhaust deflector. Had over 100 flights on it before retirement without a single engine problem. Not even a dead stick ever (with the one exception of the stone getting inside the engine incident).

It looks sideways (may be it is the angle of the camera). We could have flown for ever, with keeping the idle high enough so that the oil buildup inside the muffler would not happen (landings would be a bit tricky). The way the problem was noticed was when my brother inverted the plane inadvertently, and saw a large quantity of oil come out of the muffler.

It is a OS46 AX box type muffler. The exhaust is on one of the top corners, not by the side.

Could be that in your case running rich caused oil build up, chocked the exhaust further and became a vicious cycle.

Possible... but leaning the LSN did not help.

We have to also consider that the muffler is physically bigger in this case.

I was looking for these box types at the field, and noticed that due to their shape/design (they stick out from the edges), the outlet port is always at 45 degrees from the ground/horizontal.

In our case, the muffler was circular/cylindrical in shape, and it was pointing straight up.  Guess that makes enough of a difference at idle speeds.