Ben1098

Compression release not lowering the fuel-air mix pressure.  Start T/S with removing the spark plug.  Put back on the boot and ground the threads away from the open plug hole.  Crank over......if it cranks without stalling, the compression release is the culprit.
Next, you need to remove both the valve adj lids and the round side of head cover for the cam gear.  Rotate the crank and bring the piston to TDC....use a bare copper wire thru the plug hole to feel the TDC highest position of the piston dome.  NOTE:   there are 2 TWO TDC positions on a 4 stroke engine.  OVERLAP.....Exhaust valve just closing and the Intake vale just opening.  This not the one you want to mark the cam gear.  Rotate the crank a full 360 deg and recheck the valves.......Both should be closed with the cam lobes facing away from the rocker slipper pads.  White paint the top 12 o'clock position tooth.  Next, check the intake and exhaust valves rockers for the spec clearance.  Now for the good part.....the compression release cam within the cam center bore.
I did a post a couple months back:    T/S a no start with spark that ended up being the wrong Delphi ECM module....timing off by 90 deg.  Find this series of posts and it explains the compression release mini cam......the small dime sized disk with the flyweights "pin coupled" at the very center of the cam gear face outside.  In a nut shell, rotate the mini cam disk.... Sling weights moved out against the springs tension.  The mini cam pushes up an internal pin against the exhaust rocker thus holding the exhaust valve for a short time to bleed off some compression and then the starter can spin over the motor.  
Things that go wrong:
1.  Valve adjustment wrong.  Rotate the crank/cam slightly off the pin or hand rotate the weights out to lower the pin and now be able to adjust the valve clearance.
     Now to check the operation of the decompression release pin rubbing the exhaust rocker.  Rotate the crank backwards a couple of teeth on the cam gear.  Rotate forward
     and watch the exhaust rocker.  The rocker should hold the exhaust valve slightly open and then snap closed as the pin rotates past the rocker slipper pad.  Repeat the     
     reverse rotation and this time rotate the flyweights out to unload the pin.....the rocker should not snap back and have the spec clearance.
2.  If the pin did not do anything....as in no compression release......you might have the  "pin grove" gouged out of the slipper pad.  The rocker shaft needs to be removed with
    a slide hammer.  Check the rocker compression slipper pad....small tab vs. the much wider cam lobe slipper pad for inspection.  The gouged out stripe will be obvious.

Remove the spark plug.  Rotate the engine until the piston is at the top of travel by using a copper wire (soft 10 AWG with rounded end down) and watch the travel up and down.  When very close to TDC, the piston will stop going up and "stall" for a bit and then start to fall back down.  Rotate "between these two positions" and you have TDC.  Easier said than done.  A dial indicator can also be used if you have the set up.  Getting into the fan side is a pain with the cover.....bolt screw nut inserts usually "spin".  Easiest is to take off the belt cover exposing the drive clutch pulley.  On the rim of the pulley you can make an narrow ink mark (or tape with a ink pen line).  Do the rock back and forth to find the "going up"   and    the "going down" location on the case.  Mark the two locations.  In the middle is TDC.  Also, try to see if you can find the timing marks noted in the service manual and mark both with paint for future use.
I had a simple trick (POSTED) to hold the chain in place and keep it from falling off the crank sprocket when installing the cam gear.....string pulled for a 3rd hand.  I like to do a double check after timing the cam and then rotate to the OVERLAP (EXHAUST VALVE closing and INTAKE VALVE just opening) at the other TDC than Compression.  Always rotate slowly by hand to check for valve interference.  If something is wrong, you don't bend any valves.  Rotate the decompression flyweights against the spring return to avoid being fooled by the cam's AUTO decompression mini-cam/button hitting the cam follower.

Shine pen light into chain and lower sprocket cavity.....just to be sure the chain in on the sprocket.  Keep tension on the chain and tie a nylon twist string (not braided as they do not stretch) to the "top" of the timing chain with the other end tied off on the roll cage.  The top tie point must be very close to the position the cam gear will install to.  Slide in the cam gear and milk the chain around the gear and then keep the chain and gear tight so the chain cannot jump of the lower sprocket.  Mount gear to cam and verify the timing dots and sling weights.  The 3 hand fix.   BEN

What you found is the hardened sealant put on the output shaft/coupling cup.  It only looks like a manufactured part as it was "molded" to almost make it look like a 2 stroke rod bearing cage.  Clean it good as in getting all the hardened sealant "needles" and oil off.  Apply sealant sparingly to the outside of the shaft spline (you don't want a goober pushed into the engine/tranny case).  Next, give a good coating to the coupler spline inside (this will be pushed outward to the threaded end when pushed onto the output shaft).  This seals the spline/coupler interface.  Next coat the washer face surface of the coupler and add some to the cleaned washer face also.  Slide on the washer, smashing out a blob of sealant to seal the washer to the coupling and also have some seal to the nut when you buzz down the nut.  Use a quality NON-HARDENING SEALANT.