Thanks HarleyT & Hotshot, IPL & suggestions both most helpful.
Took it apart again, Parts list does not indicate a cotter pin in the cap #16, 21 vent hole but that's what i found there, a 1/16 x 1/2" cotter pin, spread for retention inside the cap. This occupied space needed for the grub screw #19 which was screwed all the way down into #18 insert, effectively blocking any ventilation. The insert, BTW, is a press fit and does not float in its compartment.
Years ago I took it to the dealer and I'm guessing this was one of their ideas. Maybe just uninformed or else they wanted to sell me a new saw! It never ran right after that, of course, and I had to loosen the cap every so often to get it running forever after. Needless to say, never took it to them again and now they are out of business.
Hotshot, the grub screw is just a little too long to fit floating above the insert plus is way too tight to push in a bit. I could bore it out a bit, put in a shorter screw or smaller size screw or leave it out altogether. How this was supposed to work originally is still a bit questionable given the above. Assuming the screw slot goes upwards I'm guessing it was meant to be adjusted from the top of the cap, backing it out to contact the cap whereby the screw slot would vent to the outside. If that just left one turn of screw thread in the insert it might just work but my grub screw is just a little too long. Your slot idea sounds doable.
As for the cotter pin I'm inclined to toss it. A real dirt collector too. Thought is to put a little piece of foam in the hole instead.
Re the IPL, part #22 valve on the bottom of the cap is missing. Thought it might be in the bottom of the tank but not there. It does not seem essential so I'll do without for now. Perhaps a new cap is in order if they're still available.
What I did find in the tank was a surprising amount of black dirt, stuck tight, and a good bit of water! Hmmmmmmm. All cleaned up now. Filter was in good condition and clean though.
Any further thoughts on this are most welcomed. This is part of a greater issue with the saw and I'll probably be posting again soon after I try some things.
I would like to ask a related question about fuel. I've run premium fuel for the last 10 years or so ... wow, what a difference ... but before that just regular gas (with ethanol). I'm wondering what are the potential consequences of that. Also with premium gas, should I also be using stabilizer? And with these older saws, is it a good idea to use lead substitute additive? I never thought about it before, but do run it in my old gas tractor.
Thanks again --Jim