Just been having an argument with Don and his UK distributor as it happens.
It seems our differences stem from his UK guy thinking that other makes of carbs should be tuned the same as Demons.
Plus I was wrong in thinking a Demon would act the same as other carbs including the Holley on which they are based.
It seems you do need a LOT (up to 20 degrees maybe) of initial timing to get a demon carb to work without the exhaust stinking and the plugs fouling.
That is after cleaning out all the swarf and filing the metering blocks etc flat of course. Something Don and his people do for an extra charge. This is what they mean by "baselining". A huge number of these carbs have at least swarf inside them somewhere.
It seems 99% of Demons only work OK with lots of initial and of course you then have to take out about 10 degrees from the distributor so you don't go over 34 degrees total.
You should also not use vacuum advance with this set-up. Which means more mpg and dirty plugs.
Not sure what is going on with the PCV valve or what you are doing with it. But a vacuum leak usually makes the mixture lean or if very bad it will go lean, rich, lean, rich and the rpm will go up as it goes rich and down as it goes lean. This is the power valve opening and closing because of low vacuum from the leak.
make sure your power valve has a low enough opening rating so that it does not come open simply because of a lack of manifold vacuum rather than a leak.
For the PCV to work best, mount the valve on the drivers side rocker cover and the breather on the passenger side. The valve should be connected to the carb so that air can be drawn through the engine from the breather. There should be enough sucktion on the breather grommet to hold a piece of paper quite well.
The breather takes clean air from the inside of the filter so only clean air gets pulled into the engine.
Without this system the pressure inside the engine could be excessive. You know when it is because the valley pan will pop up!
The engine should be set up and the carb tuned with the PCV system in place so as to take into account the extra air (and fumes) entering.