Well it is getting fuel but is it atomized in very small droplet form? If so is your igniter close enough to ignite the fuel? You see these spray a very fine conical mist under high pressure, if the mist is not defined or conical it sprays past the igniter. If it is fine and cone shaped it could be the positioning of your igniter. Please check both by removing the top section of the heater and watch what is going on in there. My thoughts are a bad nozzle and if you replace it pay attention to spray angle and GPH rating printed on the side of the nozzle.
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