It is the ign timing, too much. It is doing two things: increases the oxides of nitrogen & increases hydrocarbons.
For the test, he should reduce init timing to about 0-4* BTDC & disconnect MVA if he is using it.
Does advance increase HC? I would think more time for the mix to burn would reduce HC.. Especially with a lean mix.
My understanding with retarded igniton in the 70s was to reduce NOX which caused acid rain, and is formed at the higher temperatures reached with high compression or modestly lean mixes (which burn hotter).