Learning how to tune an engine properly is one of the more difficult aspects of flying model helicopters. Basically, here is how to tune and break-in a brand new engine.

I use Cool Power 15% and 30% and Magnum Heli-Plus, but these comments will apply to other brands of fuel as well.

Start with the high speed needle valve open 4 turns and the low speed needle valve open 3 turns (or half-way).

Adjust your throttle curve to about 15%, 20%, 45%, 70%, 100% throttle (at the low, 1/4, mid, 3/4 and high stick positions.)

Adjust your pitch curve to about -2, 0, 6, 8, 10 degrees (at the low, 1/4, mid, 3/4 and high stick positions.) Make sure that your high pitch is no more than 9 or 10 degrees. (If you have the engine tuned, but it still bogs at high pitch, you have too much pitch. Reduce it.)

If your engine will not start, (and you have verified that the glow plug will glow), open up the low speed needle a bit more, and retry until it fires. If the engine is spitting fuel out of the muffler, it is too rich, and lean out the low speed.

Most engines need about 1 to 1 1/2 gallons of fuel to break-in. With ringed engines, run the engine slobbering rich for the first 3 tanks of fuel. Lean the mixture by 1/2 turn for the next few tanks, and then again lean the mixture by 1/2 turn for the following few tanks. Make sure that the engine is putting out plenty of smoke, and is never lean. You will have to make little changes in the throttle curve each time you readjust the mixture to account for the power changes. Just keep the blade speed reasonable - not too high, definitely around 1700 rpm at the maximum, probably it is best to keep it around 1600 or so. By this time you should have about a gallon run through it, and it should be pretty well ready to lean out to the optimum setting. For ABC engines, it is important to run the engine a big hotter (leaner). ABC engines rely on the proper running temperature to achieve the right fit. Ringed engines have the same fit no matter what the temperature is. Because of this, it's better to run ABC engines hotter during break-in. An ABC engine that is run too rich during break-in will have scaring on the piston & cylinder wall. So run ABC's a "little hotter" and let it get up to speed, but never lean during break-in. Also, it's good to run the engine in heating cycles - let it run for a couple of minutes, and then idle to cool down.

The engine should be pretty rich, and might not even take off. There should be plenty of smoke. This is good. If this is the case, lean it out a bit so that it will fly, try hovering, etc., until the engine is developing power AND smoke. If you see a decline in the amount of smoke or power loss, you are too lean. Richen it up. Basically, if you see smoke and the engine begins to bog down as you increase from about 1/2 stick to full throttle, you are too rich on the high speed. If you increase from about 1/2 stick to full throttle and there is much less smoke than before, you are too lean on the high speed.

Shoot for around 1500-1700 rpm head speed. With experience you can judge this by sight and sound. Otherwise, use a tach, or someone else's more experienced eyes and ears. Adjust the throttle curves to achieve the desired rpm.

I set the low speed a bit rich, so the engine will drop down to an idle quickly during descents. With the heli idling on the ground, you should be able to pinch the fuel line, at the carburetor, for about 3-5 seconds without the engine dying or changing rpm. If it dies, richen the low a bit. If the rpm doesn't change, then it is rich. Make sure it is not too rich, which can cause "loading up". Let the engine idle for about 1 minute. Then increase the throttle. If the engine sputters and dies, then the low is too rich. If the engine passes the 3-5 second pinch, and doesn't die when increasing the throttle after an extended idle, then your low speed is just about perfect.

The engine needle valves are set differently with 30% versus 15%. 15% runs leaner, and 30% runs richer. Leave the low speed needle alone at first. Open up the high speed needle an additional 2 turns from where it is now. Try that. If it still doesn't have alot of smoke, richen it up more. 30% runs with much more smoke over the 15%. At the right setting, the engine will be running smooth with plenty of smoke.

You might have to richen the low speed needle as well. Adjust it so that the engine will idle reliably, it will probably be pretty close to your 15% setting, while the high speed will be much different from your 15% setting.

For engines that are already broken-in;

To check your high speed needle setting, ascend vertically at full throttle and full pitch. If you think you are close to the optimum setting on the high speed needle (plenty of power and smoke, no bogging during full power ascents at 9/10 degrees, smooth sounding when running, not crackling or burbling) then it is time to get the low speed needle set right. If you are still pretty rich on the high speed, then you can play with the low speed needle, but remember that these settings will change if you change the high speed settings again later, as the high speed setting also affects the low speed setting (but usually not vice versa).

Set the low speed so that, when idling, you can pinch closed the supply fuel line for about 3-5 seconds before the engine changes speed (speeds up). If the engine speeds up immediately after pinching the line, then it is too lean. If the engine takes longer than about 5 seconds to start leaning out, then you might be still too rich. Once you have the right setting, there is one more test. Let the engine idle for about 2 minutes. Then, quickly hit the throttle and give it about 1/2 stick. If the engine is set right it will accelerate without bogging down excessively. You should be able to set the low speed needle so that you have a reliable idle. It should be set rich enough that when you pinch the line, it should continue to idle without changing speed for at least 5 seconds. It should also be lean enough that it will not die when giving it throttle after letting it idle for a minute or two.

Some people set their low end leaner, which will give a crisper acceleration from idle. I set mine richer, because I've found that the engine runs better in flight when set richer. It allows (or forces) the engine to drop down to an idle when the heli is in a situation where the engine is unloaded and the blades are trying to keep the engine spinning (as in an auto). Otherwise, the rpm can linger at a higher speed and the engine won't drop down to a lower rpm idle.

If you are having problems tuning, use a standard muffler - not a tuned pipe. Tuned pipes can increase top end power, but make they can tuning much more difficult. An engine with a muffler reacts fairly linearly to throttle and mixture changes, while a tuned pipe does not.