It's manifold vacuum where you want the gauge. Keep adjusting the idle mixture and the idle speed until you get the highest vacuum at the correct idle rpm.
Is it a stock engine or did you put in a cam with a bunch of overlap and high duration?
If you have the timing retarded it can fire the fuel charge late, which can lead to the charge burning as it's going out of the port rather than in the cylinder. But the soot behind the exhaust pipe sounds like it's burning too rich. I wouldn't think it's the idle mixture though if it is stinking at highway speed. Maybe a sticky or sinking float?
