A four stroke engine isn't likely to run at high speed with the governor set for low speed, unless the governor is misbehaving. It can speed up slightly due to an air leak (most two strokes can speed up quite a bit more because they usually run rich to start with) but it can't run at maximum speed with the governor (speed control lever) set for minimum.
When you loosen the pinchbolt and set the governor arm, be sure that the arm is sliding freely relative to the pivot shaft, and follow the directions in Item 10 of the service manual carefully. It sounds as if you may have achieved the opposite of what you intended, with that adjustment: you may have locked the governor on full throttle. Did you follow step 2 (rotate the governor shaft all the way) as well as step 1 (rotate the governor arm all the way)? If you did step 1 but not step 2, I think you'd get exactly what you got.
