KZ400H Black Elbow - Air Vent??

What is this part highlighted in yellow, and why would fuel come out of it...? Is this an air vent...? In the parts list diagram, all it indicates is part number 44, "Tube"...
 

That nipple is for a float bowl vent.  Attach a hose, and run it down to the ground, away from your rear tire, in case of an overflow.  Since you already have an overflow, that means the float needle/seat, isn't sealing.  Or, you are feeding fuel into the carbs via the wrong port (fuel enters the carbs at point A as highlighted on the diagram)

No, I have the fuel entering through that "A"  T-valve/fuel tube;  I went out today to try to fine tune the carb a bit - I had a bit of a backfire, which I take to be a lean condition in the fuel flow - I had it on Prime, too, so that might be part of the problem as well, although I have yet to take the carbs out again and polish the needle seat - but I had it running, richened up the flow a little and noticed fuel flowing out of both that tube and the regular drain tube(the one you usually unscrew to drain the bowls).  But fuel is not supposed to come out of the float bowl vent, is it...?   What did you say you used to polish the float needle seat...? 

You might want to follow the factory Kawasaki manual, and perform the "clear tube" test.  That will verify the actual fuel level in the carbs.  Float height is just an approximation. What really matters, is fuel level.  

Oh, and real deal Keihin, or Keyster brand float needles are best.  They are not overly expensive, but well worth the expense.