Running too rich can wash the oil off the cylinder wall and accelerate wear.
Your bike's symptom are indicative of running too rich.
A dirty or restrictive air filter can make it run too rich. You didn't state which type you have. If stock, then try a Uni filter unless you are operating in dusty conditions.
The exhaust type and filter type also effects the mixture requirements. If not stock, the factory carb settings likely won't apply. But, the stock carb settings for your bike are listed in a chart in the FAQ.
Are you sure your choke is adjusted so all carbs are completely open?
Do you know what parts came in your carb kit. There are different needle taper profiles for the CB500, Cb550K and CB550F. I'm guessing from your description that your slows should be #38, the needle ought to have the CB550F profile, and Mains should be #100. I'd put the needle clips in the second groove from the top. Then clean the plugs, run it and check the deposits again for improvement.
You really should need to apply choke to start it. If you are strating out rich enough to start without it, then when it gets warm it will be too rich as it can burn much more efficiently hot and doesn't need the extra fuel to run.
I agree you should tell us the Spark plug numbers you are using, and it won't hurt to tell us what you set your float height at. Fuel bowls too full can make things run richer, too.
Lastly, there are emuslion tubes between the needle jet and the main jet that have small holes drilled in them crossways. These premix air before it is fed to the carb throat. If these holes are plugged things will run richer, also. They aren't that easy to remove and clean. But, maybe you did anyway.
Are all your spark plug looking like they are running the same mixture for all cylinders?
Cheers,