Problem resolved!
Well, after removing the engine to turn it upside down, I was able to get the exhaust valve keepers installed. Put the engine back on the unit and fired it up. Ran fine. For a while and then shut off. Grrr!
Ok, so I know the valve clearance wasn't the issue. By this time I am fed up with the thing so decide to just install the newly acquired generator engine. Pulling the engine off the generator is no easy feat as the generator portion has to be disassembled to get it off. Finally get it loose and to my dismay, it has a tapered shaft. So much for the parts breakdown which depicted a straight shaft. Double Rats!
So what to do? I figure that the problem MUST be ignition even though it shows spark since I know it isn't compression or fuel. I remove the coil from the splitter engine and attempt to rob a part off another engine but discover it won't work as the flywheels are different sizes. So I disassemble the taper shaft generator engine and took its coil and flywheel and install it onto the splitter. It works. Actually split some wood and ran the engine almost an hour with no shut downs.
So now I have a generator with a disassembled engine and generator head. Seems a shame for a couple parts. I may eventually revisit that but for now have a running splitter. Can't believe how much time was spent on this. Thanks for all the suggestions from ya'll.