Well, I took apart the valve. It was all caked up on the inside with what looked like rust junk from the inside of the gas tank. I cleaned it out, tried it again, still leaked. Leaks even more when you push down on the center of the knob.
When I cleaned it out I did notice there were little tiny O-rings inside the valve that looked like they had broken and were not doing their job. Now that I think about it, that's probably what the problem is.
And with that much rust junk built up in there it make me think I really need to flush the gas tank of all that stuff.
Looks like I'll be driving down to Myron's Mopeds tomorrow to get a new valve.