Again, you DON"T need the off-road set-up. They are NOT NECESSARY for street use.
KTM guy: You asked if you should get them and I said "you don't need them". That's all. If you just ordered the needles and seats, you'll be using your own floats. Float level remains the same: airhorn inverted with gasket in place, 7/16" between the gasket and the outer tip of the float. Float drop: airhorn right side up, gasket in place, +-1" from gasket to the outer tip of float. I come on here to try and help, not dictate...
Did I miss the pictures? Sorry, KTM guy, can't help without seeing your set-up.
Looks like the float arm might be hitting the anti-slosh divider plate, maybe before completely shutting off the flow of fuel. After you shut the motor off and waiting a few minutes, very, very slowly open the throttle and look down into the intake manifold with a flashlight to see if the manifold floor is wet with gas. If it is, the floats are still not shutting off completely. This would cause the high consumption and hard hot starting.
I would say you have a head gasket that is bad or a cracked head! White smoke is usually antifreeze. it starts great cold because it is running way too rich! you will need to fix one thing at a time.. like the head gasket, then tackle the carb again make sure the float/needle and seat is not sticking...
And make sure the float needle is not upside down.
Normally bad smelling white smoke is indicative of burning oil and chances are it could be a blown head gasket or worst yet a cracked head. Either way you can pretty much determine where to start to check the problem, that's just my 2 cents. Possibly the new oil pump is working so good that there is great possibility it has greatly increased the oil pressure in the system to the point that a weakened area in the system around the head area has gave and thus the escape of the oil into the combustion chamber. My guess is a cracked head directly over the combustion chamber. I could be wrong and instead it could be around the valve area or last but not least the head gasket, which honestly with a problem like this is what I'd be hoping for because it's a lot cheaper to replace a head gasket than paying for a valve job or worst yet replacing a whole matching head. Might as well replace both and that in my book is more expensive but oh the outcome when it's fixed and done.
Yes, you were not adjusting the floats correctly and yes, you circled the part that appeared to be limiting the float travel up. Glad you found the video. Edelbrock has a great video on the AFBs, covering disassembly, adjusting, re-assembly and tuning. I highly recommend it. The main thing you should keep in mind when you are adjusting the floats is to NOT put any pressure on the needle. If you force the needle into the seat, it can groove the tip of the needle and then you have another problem. A couple of pairs of small needle nose pliers will help you get it right. The float level is 7/16", per the carburetor manufacturer. Get it right on the money and you won't have to wonder if it's causing you problems. Again, take several pictures after you adjust them and post them before you re-assemble it. PM me when you post them.
Have you pulled the plugs? If you're burning oil to the point that it smokes that bad, the plugs should be oil soaked. Could be a stuck oil ring(s) since the motor sat for so long. If the plugs are oil soaked, squirt some Marvel Mystery oil in each cylinder and hand crank it a couple of revolutions. Then let it sit overnight. Crank it with no plugs and then install a fresh set. Sometimes that stuff performs miracles...