sounds like you still may have some carb problems to deal with. I have had these engines idling smoothly as low as 450 to 475 RPM and some much lower (to 375 RPM) when everthing is in good condistion and tuned correctly. Things to check are the carb's float level setting also these old brass floats can crack and take on fuel becoming heavy and then causing flooding, the throdle shaft for being excessively loose, carb base gasket and the intake gasket all of these last three can cause vacuum leaks. A full tune up will require (see the below order for best results) setting the points, plug gap, and timing correctly plus setting the valve rocker arms to spec. Torquing the intake / exhaust manafolds to spec (23 to 28 Ft. Lb's). Lastly the carb is tuned to the lean best idle. Good luck :nod Edited
Adistionaly a Compression test (150 psi is minimum) will tell you a lot about the condistion of your motor and you should also set the valve rockers to spec before starting the tune up to .019 cold. It's not a bad idea to retorque the head bolts (105 to 115 Ft. Lb.s) with the engine warmed up good and then recheck that the rockers are still at .019 Hot (for the standard adjustable rockers). 45 to 50 psi is the normal oil presure.
Basic tune up specs to get your 223 running good follow this order for the quickest way to get tuned up once you have your carb fixed!
1. Set your Spark Plug Gap to .034 and install them.
2. Now set the Point gap to .025 or better yet to a Dwell of 39 degrees.
3. Next set your Base Timing to 4 degrees BTDC for a manual trans with Vacuum line to the Distributor disconnected and plugged. Reconnect the vacuum line to the distributor. This is the stock timing setting and works very well, later though you can try advancing it some more to (8 to 10 degrees usally works good) and see if your engine runs any better.
4. You should verify first that the float level setting (the wet fuel level) is correct on your carb. Still a Holley 1904?
5. Next set your carb mixture setting to the lean best idle, the basic setting after a carb rebuild is 1 1/2 turns out. Then with a tach hooked up and the engine is first warmed up to normal operating temp. Turn the mixture screw in until idle speed drops slightly then turn the screw out until you reach its highest idle RPM then turn screw in 1/4 turn (to Lean it) this is your lean best idle setting.
6. Last set the Curb Idle RPM stock is 475 to 500 RPM (in neutral).
7. The choke parts Need to be checked that they are working correctly and be adjusted properly. Be sure the choke blade is fully open with the dash cable pushed in with a clearance of about 1/8 to 3/16 inch out from dash. Adjust idle speed screw if it has one to 1200 to 1500 RPM when the choke is pulled out.
For the best results I usually repeat steps 5 & 6 just to verify that the carb RPM settings are right on. Good luck