Have you pulled the needles to make sure they aren't damaged? How does the timing and spark control on that motor work? I am used to small engines, but not that one. Like, how does it generate spark? Like with a magneto? Have you checked the gap on it? These are all just basic things my dad...
I mean regular paint will work as well. It's going to get scratches, whether painted or not. If you want to paint it, Krylon has a paint suitable for plastics that is pretty good stuff. You can also coat that with clear for added protection.