It didn't stall because you set the idling RPM to 4000 and that is where the needle is lifted enough to keep the bike running. The VC screw works only for 1/4th throttle opening. If you would have kept the idling RPM same as stock say 1400 rpm and then tightened the VC fully your engine would have stalled.
Bajaj oil is bad. Trust me. Castrol is way better. Even the Activ4T is better.
Don't go for the 220F or the 220FI or even the 200 sprocket kit.

All those sets are way too tall for a P180. You will redline [with a little effort more than stock] through the first 4 gears but the 5th gear becomes too tall when these sprockets are used. I have a P220FI sprocket kit on my P180UG3. Although a straight fit, the 5th gear becomes very tall. Kinda like overdrive. Speeds increase very slowly, to achieve the top speed on this setup I'll have to wait for hours holding the throttle in max position and crouching and everything on a long empty stretch of road and you cannot redline in the 5th which was very easy earlier. I'm gonna get a custom 13 teeth sprocket made from a friend's workshop to make the gearing a bit shorter than current.

Try a 38 size pilot jet. Unicorn uses 38. CBZ Extreme uses 40. However, only go for the next bigger size on pilot jet else u'll end up having too rich a mixture. Regarding top speed, i feel the culprit is ur clutch plates. 109 at 9800 rpm clearly says that. Also, you won't gain more than 0.7 hp after proper upjetting and K&N. Hence accept it. Huge power gain is not met easily. Better make full use of what u have available by reducing the losses (bad clutch plates).
If you can get your hands on a good tachometer, tune ur bike after changing the pilot jet or else have a good mechanic do it for you. Idle tuning should be done starting from normal idling rpm (1400) and not 4000 as u did.
Most important is not to get frustrated by all this. Keep cool and analyze and solve the problem.

carb

P180ug3 will not do 130 in stock form.... do not go for 220fs sprocker kit instead use ones from 220dtsfi (37/14)

@kbr: Ok i will try tuning the other way, and p180 claims a top end of 130kmph and itz no where near.
am using the dtsi oil from last two services, till then it was castrol.
and for sprockets i was planning it from the p220F (36/14).

nope its the same ,i happen to tune it myself you tighten it to make it rich ,unscrew it to make it lean

@ARNandal; the reason it did not stall is because you made the mixture rich .... what engine oil are you using in your bike(brand and grade)....... ideally at 9.8k it should show more .if you want slightly higher topspeed try switching to p200s sprocket kit

ya am running with the zma's 125. and as 'psr' said 4-strokes make lean mixture with clockwise rotation.

i am wondering why my bike didnt stall even when completely leaned ..
can there be a problem like fuel leaking to the venturi other than through the main jet or is my pilot jet fully open?

i was facing top speed problem right from the beginning (when stock, 9.8k,113kmph). I used to feel like on a cycle!
now itz 109kmph at somewhere around 8k & 9k?
am feeling like am cheated with a 150cc mill!!

@psr: please tel me what that screw is, which is placed below the idle screw, just to the right where you quoted idle screw in the image you attached to show me the reed switch. Sorry am browser gets crashed while trying to attach.

I think in Pulsars and RTRs it is the other way...clockwise to lean and anticlockwise to make the AFR rich....not like KB.

buddy turning the mixture screw clockwise makes the mixture rich and turning the screw anticlockwise makes it lean.....btw did you replace the main jet from that of zma

Today i tried tuning, got the bike warmed up and then set the idle screw to 4000rpm. Then slowly started leaning the mixture (clockwise rotation) until it got tight. The bike didnt stall neither was there a decrease in rpm (not more than 1200rpm). And i didnt have to touch the idle screw. now the engine rpm that showed was 2800-3000rpm and i couldnt observe any major fluctuations in rpm (not more than 500rpm). then i started making it richer (turning anticlockwise) till 3 n1/2 turns from not full tight. now there is minimum crackers from the exhaust 1or2 small bursts at 1or2 throttle during idling and the same 1or2 small ones during engine braking from 5th gear throttle.
The max rpm attained was 9000rpm at full throttle (it took some time) and speed somewhere around 109kmph and 100kmph at 7800rpm. (claimed 126kmph is still a dream!)

When the main jet was 2n1/2 turns from not full tight, it had crackers from the exhaust at 1/2 throttle but not like those hollow ones, and max rpm attained was 8000rpm it really strained to go beyond that.

hope experts can figure out something from this.
is there any problem other than just tuning issues?

pulsar 180 ug3 runs pilot jet size of 17.5 ....do not upjet the pilot first upjet the mains and see if it works

@shubhanker: Ok, please suggest me a jet size, the current is 35 i believe and hope 40 would make it, which bike has this pilot size running...
thanks buddy...

At normal riding, the throttle wring is not much and hence the pilot jet is in picture for most of the time. After fitting K&N, there is more air going into the engine for the same amount of fuel due to a stock pilot jet, hence the mixture becomes lean. Thus, the overheating and the strange smell and knocking when you ride normally.

The pilot circuit in the carburetor is very thin as compared to main throttle circuit. Hence the contribution of the pilot jet after 1/4 throttle significantly reduces, however, it still contributes.

Engines need a slightly leaner mixture to rev higher (approx. 7500 and above), hence even the minimal contribution from pilot jet at W.O.T at higher revs is good for a carburetor engine. The bike might still not rev after 8700 rpm, but you will have a stark difference in torque experienced. Try it to believe it. I also have a K&N on my unicorn.

@shubhanker: I have tried with the stock Main jet, pilot jet/slow speed jet is just used for idling and supplying fuel till 1/4th of the throttle...
but did you mean that fuel gets to the main jet through the pilot jet? *
and i didnt understand this sentence of yours....
"pilot has become 'lean' due to freer flowing air filter, hence the overheating and knocking and what not.." is it anything related to the *? please elaborate.

I meant a bigger pilot jet and stock main jet..