Let me understand this.
You have to apply the choke to get it to run when cold?
As it warms do you slowly open the choke?
Once the choke is fully open will it idle okay? If not is there black smoke coming from the exhaust indicating flooding?
How is the oil pressure when it's running and hot?
How much does the oil level come up after the engine has been run a while and is at operating temp?
How long at a time do you run the engine? A few minutes at a time?
It's pretty normal to get condensation out the tail pipe. Especially if you are only doing short runs. The exhaust doesn't sound like it is getting hot enough to get the moisture out before the engine is shut down. So even more condensation happens. You can get quite a bit of water out the tail pipe from short hops.
