Following up on Bob and Phil's suggestios:
1. Emptied fuel tank, cleaned and refilled with gas.
2. Removed carburetor, cleaned and blew fine mesh filter.
3. Replaced joint seal and diaphragm.
4. Engine starts and dies unless priming is maintained manually (tough)
Q. It seems fuel is not being pulled by diaphragm. Since diaphragm is actuated by engine vacuum could there be a leak? Where?
Rubber gasket seems to be OK.

Charles from Toronto, June 2008

Check that the rubber pipe between the engine crankcase (the take off is usually around the tappet cover) and the carburettor. The vacuum required for the carb to pump fuel is controlled by this pipe.

John, June 2008