Jeremiah C - glad I was able to help some. With regard to removing the heads on your twin cylinder, I've never been inside one so that question should go to one of the guys familiar with them. You can review the Kohler Service Manual for the twinc cylinders as well as see what Kohler recommends. I do know on the single cylinder K series de-carboning is recommended every 500 hours. Low Ash Oil has to help avoid carbon, and MMO gets high marks from alot of guys on here, not sure about Premium gas tho, since there is no lead in it anyway. I also don't know the water spray thru the carb since my fear is any carbon could break off and get caught between a worn/weak ring and the cylinder wall. I've seen some scoring and believe it was from carbon if the rings were still in tack but weak - don't know what else it could/might be - but since I'm not a real mechanic I have to use logic and what others have passed along. As for making sure the heads are flat/true, you can use a piece of sand paper drawn over a piece of glass and should be able to tell if it's true by where it rubs. If upon initial sanding you see areas not touched then the head is warped. If it buffs the engine head then it's likely still true. Do this after you've cleaned the carbon off the head.
Ryan, Ryan, Ryan Mc - a 3rd 169. Geez, they're growing like flowers in Iowa. Are you certain this one has a K341 and not a K321? It would certainly seem odd to have the smaller air cleaner and the muffler off the side like that.
Tom F - you got some work cut out for you. Your PTO clutch does need to be re-built. And no you cannot use a 3-jaw puller to remove the PTO clutch. The 6 set screws are the key to begin the removal, and unfortunately I don't know the size, but when you do find out make sure you use a good strong T-handle allen wrench. You're gonna need the leverage, and you don't want to strip the allen heads. The FAQ should suggest using to PB Blaster before you start the removal, and I think most of the other details will be there as well. You may need a 3-jaw puller to remove the bearing that the PTO clutch pulley is mounted on, but bearing removal isn't until after the pulley is removed. The 6 set screws are the key to start the process. Hopefully you won't have to drill them out. You can get a clutch rebuild kit from one of the sponsors, or even a complete rebuilt clutch if it's necessary. Good luck with your project, and study the Service manual as well. There are pics and other important details in the manual. I've never had to replace rear axle seals but there have been a few other discussions which seem to imply it's not really that hard. It will probably take a few hours and should be described in the Service Manual as well. Most of your expense for the seal replacement job will be the cost of the HyTran rearend fluid, and don't forget to replace the filter as well. Your seal leak is quite obvious but I'd also look for a possible leak at the hydro pump mount. Typically it shows up as being wet where the line from the pump connects to the front bottom of the rearend, but you need to look up higher and see if it's wet. It used to be a $3 cork gasket that took about 4 hours to replace, and again the biggest expense is the cost of the HyTran fluid. So if you're gonna do axle seals you also need to make sure you don't have the pump seal issue. I think there is a FAQ on the pump seal.
David R - Kevin has provided you some good info. Don T just recently had a similar problem and I believe he discovered he had connect the wires incorrectly. If you have a 4 terminal V/R and one of these 4 is marked L or Load then it should not have a wire on connected to it. You should wires connected to B or BAT for Battery, F for Field, and G or GEN for Generator. You should also have a 4th wire that is for ground. Assuming your 108 has the correct wiring harness, your ground should come directly off your negative battery cable to a connector on the V/R. This isn't shown really well in the diagram pic Kevin posted. It does show a ground but doesn't reall show it as having a connetor on the V/R which should be on an xx8/xx9 series. Hope this helps.
Hydro Harry
Old Cubs Never Die (but can have their wires crossed and keep them turning over)