So this is my first post on the forum. I've done a quick search to see if a similar question has already been answered, but no luck.

My bike: So last August I purchased my first street bike, a 2006 S40, about 11000 miles (now has 12000). It's my everyday commuter (except when it sat for 3 months over winter). No mods, to my knowledge, on the bike. It's run pretty well since I've had it, with no issues (it has always backfired when letting off the throttle and coasting, which I think it related to a lean F/A mixture). The bike seldom has trouble starting cold (except when temps reach -5 C (20-25 F, but choke and a well charged battery get it going).

My question: I decided to give it a good clean/polish the other day, change air and oil filter and the spark plug.  There's quite a bit of carbon build up on the plug's threads, which I'm told it's a sign of lean fuel-air mixture (also, the exhaust pipe is turning blueish). I also noticed a little bit of oil coming from the head assembly. Is this oil an issue? A sign the gasket needs replacing? Could this somehow contribute to the lean mixture? If not, what could be causing the lean mixture (primed the petcock and fuel drains freely groom the carburettor hose, so I don't think that's obstructed).

Any thoughts/opinions/ideas would be greatly appreciated! Thanks

I think the head cover is leaking (there is no gasket used.  just sealer) the oil running down around the sparkplug and seeping into the plug threads,(not a big issue unless oil usage is) the plug tip needs a bit of cleaning ,but is a decent color( but may be a bit lean -plug should be light tan-bright white would be very lean) ,it could be reused. Back firing /bluing could be running lean. we would need to know more,  your elevation above sea level,  or area where you live,  before any suggestions to help rid you of  those problems.( I'd read up on the spacer mod and check the size jets (pilot and main)
You may be able to stop/slow the oil leak by making sure the bolt that holds the front of the left chrome cover is tight as this bolt does hold down that area of the cover's sealing surface, and the area the leak appears to be coming from.                

batman wrote on 04/01/19 at 21:34:04:

no issue on the oil usage. I live in about 300m (1150 ft) above sea level, in the Pacific Northwest (about 4 hours inland). Does ambient temperature affect backfiring, because I ride when it's pretty bloody cold out (below freezing), and that seems to have an effect. Thank you for the tips; I'll ensure the Chrome cover is on firm and read up on those topics you mentioned.

Dave wrote on 04/02/19 at 04:11:38:

great explanation on the functioning of the carb during coasting, really helped my understanding. The muffler on the bike is stock. In fact, I don't think there have been any mods performed on it. Do you agree with Batman that the small leak may not be too much of an issue? I'll have a look at the tech section (and I think I have a Clymer around somewhere), but I suspect removing the head cap may be a little above my pay grade. Thanks for the suggestion!

You have 11000 problem free miles.  The plug looks little worn and maybe a tad lean which could possibly be because it has been ridden in cooler temperatures during fall/winter.  My advice would be to leave it alone if it runs well.  

If you want to explore jetting adjustments, pay attention to when and where the bike runs better.  If it runs better in the hot afternoons than it does in the cold mornings, then it could be a tad lean.  You might richen it up and find that it runs better in the morning than it does in the warm afternoons.  You have to find that right balance.

You also have to consider where it needs adjustment.  If it runs great off the bottom end and flattens out on top, then maybe a main jet adjustment is needed.  Since you commute, you have the opportunity to see if the top end/bottome performance is better or worse in the morning's cold, dense air (which requires more fuel) or afternoon's warm/thinner air (which needs less fuel). Elevation has similar effects on jetting.  Air is denser at lower elevations and requires more fuel than the thin air found at higher elevations.

Personally, wouldn't go more than one jet size up based on the color of your plug unless testing proves otherwise.   I would leave the needle stock (no white spacer mod).  

I commute with my bike and am one step up with my jetting (both main and pilot).  My plug is a perfect light tan color, just a little darker than yours.  My bike runs slightly better on cooler mornings than it does on really hot afternoons.  It shows no signs of being lean until it gets down into freezing temperatures which I don't ride often.  It's running rich when it gets above 85-90 degrees on hot summer afternoons.

Tuning and performance generally reference 3 areas of engine performance (some times called the "powerband"); the "bottom-end" or "low-end" which refers to lower RPMs, the "top-end" which refers to higher RPMs, and the "mid-range" which is the middle RPMs or (think of it as the transition between low and top end).  These generally coincide with how far you have the throttle open.

The best way to quantify them short of having a dyno is with "seat of your pants" observation.  If the bike feels like it runs clean and responsive when you first crack the throttle open, it could be said that it "pulls good off the bottom".   It's "a little flat on top" means it doesn't pull well at higher RPMs and the engine struggles to reach its peak.  Having a "flat spot in the middle" means it struggles to pull through transition between the bottom-end and top-end.

Generally speaking, you would tune for top-end performance first making sure it runs strong at high speeds.  Top-end adjustments are made with the main jet.  Then you should tune the bottom-end using the pilot jet.  Then you make sure that the bike makes a strong transition from the low-end all the way into the top-end.  This is the midrange and it is controlled by the needle position, the needle, and the needle jet, though you really just make adjustments to the needle position.  

The reason you tune the mid-range last is because it is affected by the bottom and top end jetting.  It's really just a way to fine-tune the transition between them.

In my opinion, the air-screw is mostly useless in terms of real-world performance.  It basically a way to fine-tune the bottom end performance just off idle.  You won't notice huge gains or losses here.

In my case, I bought a used bike that was jetted extremely rich for my area (55 pilot and 155 main jets).  It ran like a turd and the plug was black with wet carbon.  I went back to stock jetting (I think it was a 45 pilot and 145 main) and then tuned it based on the "seat of the pants" performance I was getting using different jet combinations over the course of a summer of daily commuting.  

I found that stock jetting was a tad lean for my bike in the conditions I spent most of my time in.  I jumped up a couple of jet sizes and found that the jetting was better in cool temps but the bike was a little rich on a warm afternoon rides home.  I settled on one size up with the pilot jet and one size up with the main jet.  

Then I tuned the midrange.  I started with the stock white spacer that I used while sorting our the bottom and top ends. I thought maybe I could gain with a little richer mid-range so I use a half-spacer, but it made the bike run flat in the mid-range.  I went to a 3/4 spacer to lean it out a tad and it got better.  

My bike still runs a tad rich on really hot days.  The stock jetting would perform better there.  But my current jetting runs much better between 35-80 degrees which covers my morning commutes and all of my afternoon rides home except for a few days during the dog days of summer.

Hopefully that will help, but honestly.  Don't fix what ain't broke.  If your bike runs well, then it ain't broke!  

Over time, your oil leak is gonna make a real mess.  It won't kill your engine but it will be a filthy, grimy mess.  The spark plug appears worn out.  The color is fine but the gap looks to be on the order of .050" (just an estimate from your photo).  It should be around .032".  You have a new one so I would certainly change it.  Make sure you put a light coat of anti-seize compound on the threads prior to installation.