Sounds like you're dieseling, i.e. the mixture is igniting without the benefit of spark.
Either your timing is way off, or your ignition actually does not shut off when you turn the ignition off, don't see how though.
You mentioned that you're idle screw is turned in two turns from touching the throttle plate. That's a full turn more than what my Bings are set at. Back those screws off to just one turn from touching the throttle plate.
Follow disston's advice and verify that OT is OT. A bamboo skewer works well to check the rise of the piston. When you get to TDC, aka OT, you should see that mark in the window.
If you don't, then all your work trying to time the ignition has been for naught.
If you can't see that mark then somebody installed your flywheel incorrectly and it needs to be corrected.