I also got one new in the clear plastic box with all the goodies. My recollection is that it included a second venturi (a smaller one I think). I had an expeirence similar to yours; it would fire and run a prime but it wouldn't run. I switched the venturi inserts and that did the trick. If you don't have a second venturi, you could try making the red venturi smaller by inserting a smaller tube (brass, fuel tube, plastic straw, etc). Many cranky diesels have been tamed by restricting the venturi size. You could also take apart the needle valve assembly and make sure that its clear and clean of any stray bits of metal from the machining processes. The final thing to do would be to remove the back plate and make sure the rotary (disk) valve is working properly.

And propeller?

The propeller is perfectly balanced. I've now fashioned a locking lever that works perfectly.