Could be a number of things, hard to say without seeing it in person.

Try on a boat on the lake and see how it idles.

What is the compression? How strong is the spark? Did you linc n sync?

Spark quality and strength play a major role in idle. There are many tricks to improve spark strength and thus idle quality.

Use a timing fixture to set the points instead of a feeler gauge.
http://www.franksoutboardtools.com/timing-fixtures.html

Line the coils up to the mag plate bosses using a coil locator ring.

Points should be polished up shiny, and then de greased with acetone or lacquer thinner. A worn bushing on the mag plate will cause eratic spark timing, so to get around that use Atom ignition modules (if you can find them) in place of the points and condenser. Make sure plug wires are good and have good solid non corroded connections at both ends

Agree with above. Most important thing I find is using a timing fixture. IT allows you to set the points to fire exactly 180 degrees apart, at the exact correct time, which is critical for good running motor.

Imagine a see saw with a kid on either end. The kids are the pistons, the see saw the crank. If there are 2 adults on either end helping them along (the spark plugs). If the one adult pushes down on his side before his child reaches the peak, it will be an abrubt and jerky change of motion. If too late, and his child is already on way down, there will be lost power. If both adults are pushing erratically at different times in the stroke, the whole thing will be a mess.

Now if both adults push down when their child is at the peak of their travel, with the same amount of force, equally apart, the see saw will travel back and forth smoothly and gracefully.

I realize not a perfect analogy, but you get the picture.

Correct condensors, which are not shorted, also important.

Some coils give better spark than others. Those with a Mercotronic or Stevens tester can verify this. As crappy as the Sierra coils fit, they blast a real hot spark!

Quality lead, without corrosion are important. Equally important, is the condition at either end. Properly trimmed and installed plug clips/boots, and properly twisted on coil.

You want that coil out as far as you can, without it rubbing, about a papers width away, for max spark. In conjunction with that, a well magnetized flywheel.

And as stated, don’t use the points right out of the package, polish those buggers up! Even new points have oxidation on them.

I realize I went over all of what Wedgie already stated, but I totally agree with him.

That covers the spark, but of course if compression is not up to par, or the linc n sync is off, or the fuel mix is bad, or the crank case leaks, or the carb settings are not ideal, etc etc etc, the motor just wont idle.

So there are many factors at play, and when all is as it should be, those 5.5s idle down so nice you can almost count the RPMS! Like a fine tuned sewing machine.