That is helpful - I had misinterpreted the picture I saw before. In the picture below, the spring inside the red oval is the governor spring. The lever in the green circle is the speed control lever. When you move the speed control on the handlebar from slow to fast, the speed control lever circled should move clockwise, and the governor spring in the red oval should stretch:
[Linked Image]

It appears that the speed control cable is not correctly adjusted. If the black outer sleeve of the cable is slid to the right, by loosening the clamp screw in the top-center of the picture, the lever connected to the cable will move to the right, and the adjustment screw at the top of the green circle will come into contact with the speed control lever. If you then move the cable outer even further to the right, the cable lever will rotate the speed control lever clockwise, and stretch the governor spring further. This will increase the governed speed.

It appears that because of the incorrect positioning of the cable outer, the maximum engine speed at present is being set by the other adjustment screw, slightly to the right of the green circle. This screw actually sets the minimum, or idle, speed of the engine. So, at present the engine only idles. When you correctly adjust the position of the cable outer, it should have the intended speed range.