Should be .012" on a SAM system. Can you rock your flywheel back and forth like the upper bushing in the case is badly worn? Otherwise they are slotted to make the adjustment.
Digital Spark Advance Ignition (DSAI) I've seen Sears do this before and mix them up. A Courage twin is offered with DSAM, DSAI, or what they call a fixed timing system with a normal CD to time the spark. That is what you are converting to. In my distributor system they have a footnote instructing to order 3270701s rather than the 03s as the Sears site recommended. Here is an online link for the bulletin to help you wrap your head around this: https://www.smallenginesuppliers.com/html/engine-specs/kohler/PB-259_DSAI_MDI_IGNITION.pdf And there you go...
/ Engine runs rough for a while, then smooth for a while, repeat