Small Engine Troubleshooting Problems? Ask a Mechanic Now.
It sounds like the needle in the carb didn't seal off and fuel has entered the crankcase. You will need to do an oil change and clean the carb, possibly rebuild the carb if needle is bad to repair this issue.
The solenoid keeps fuel from entering the jet and starting. The needle is what would allow the fuel to seep over into the cylinder and overflow through the exhaust