sounds like trouble with the decompression valve in the head..
There's this little valve in the head. Activating it (opening it) releases engine compression and allows the engine to start more easily. If the valve is leaking you might be hearing the 'pop' of normal combustion.
_when I hold this little rod (it goes up and down on the outside of the cylinder head_
Little rod is probably the decompression valve's stem. If so, it should not "go up and down" while the engine is running..
The decompression valve is held tightly closed by a strong spring. It would be forced open by pulling a lever on the handle bars.
Perhaps the decompresion cable, spring or lever has a problem.. or perhaps something, like a chunk of carbon, got under the valve and it's sticking open at all times.. gotta get in there and look. The valve should be closed and shouldnot leak.
To test the valve's sealing ability, remove the head, turn it upside down and pour a bit of gasoline around the valve. If any leaks the valve is leaking.
But it seems as though your valve will be found to be obviously open and this should be visible without any test.