FSM miley machine

You are assigning a value to 'out' in both always blocks. You can't do this. You need to remove it from the clocked always block into the other. In your case 'out' results in a combinational circuit. Giving it a value in the clocked block is wrong.

You're also using blocking assignments in your clocked block. Although it makes no odds in your code, it is common practice to use the non-blocking assignment operator. There are perfectly good reasons to use the blocking operator. However, given you'er new to the language I suggest you stick to non-blocking assignments (in clocked always blocks only) until you're more fluent with the language.

Have alook at "blocking and nonblocking in verilog (http://www.asic-world.com/tidbits/blocking.html)".

Cheers,

Alex