Some should come out as a vapor. The piston rising in the cylinder pulls a vacuum in the sealed crankcase which pulls the fuel-air mix in through the carb, filling the crankcase with fuel-air mix and lubbing the bottom end. As the piston then goes down the cylinder it creates pressure in the crankcase, which forces the mix from the crankase through the transfer port(s) into the cylinder, very unlike a 4 stroke.
Pull out the plug and put the plug wire back on, then hold (ground) the plug threads against the engine fins away from the plug hole. As you turn over the engine you should see a strong spark in dim light. If the spark is weak it will have a hard time firing the fuel, especially under compression. A fat blue spark with a loud snapping noise is perfect, a fat yellow spark with a fairly loud snapping noise will do, and a weak yellow spark with little snap may not be strong enough. If you are unfamiliar with testing plugs this way, you can do the same test with one plug from your car. That will give you a baseline for what a hot spark should look and sound like. You may get a nice jolt doing this so hold the plug with a pair of pliars with insulated handles.
There are some threads here with names and numbers of better quality spark plugs for your engine. Luck!