Rotary Valve
I researched this and typed a full comment and for some reason, I got shut down on my internet connection.
I'm 99.9% sure it's your rotary valve and later this evening, I'll re-type my findings on why I think it's your rotary valve....
I'll be in again around 8:00p.m. central time.............
O.K.....the rotary valve. I do think the rotary valve could be your problem. My information is from the 1994 SP because I don't have anything on the 1990, but I still think the info is good for reference.
You've got spark and fuel but no ignition. This could be caused by the clearance between the rotary valve and cover. If the the rotary valve clearance is over the required .35mm clearance, then the engine will be extremely hard to start, if it starts at all. On the other hand, if it's below the .35 mm of clearance, the engine will run, but run hot. There are also other things in the rotary valve that can cause you problems such as the backlash and the deflection. For the 1994 SP model, the rotary valve type was 147 degree wheel and the XP was a 159 degree wheel. They both are interchangable mechanically, but won't operate properly if installed on the wrong engine (which on our premium members section, you can see these rotary wheels in actual size to understand the difference). The purpose of the rotary valve is to control the opening and closing of the inlet ports in sequence for cylinder fueling and ignition.
You were partially correct on the timing. The 1994 SP is set to be open at 130 degrees BTDC (before top dead center) + or - 5 degrees and the closing at 65 degrees ATDC (after top dead center) + or - 5 degrees.
So if you got spark on the plugs and it's obvious they show signs of fueling, I'd bet heavily on the rotary valve either being out of clearance or out of timing.
This information is based on the 1994 SP and I believe that it's entirely possible the 1990 shares the same engine and set-up.
I am not a certified OEM mechanic but have worked on small engines, automobile and outboard engines practically my entire life. I say that because I don't want you to take my advice as that of an OEM certified mechanic. It's entirely based on research and my understanding of the Rotax engine and may or may not be completely accurate to your problem.
Please let us know what you do and what you find out. I'll be curious to know if you find a solution and what you did to find it.