It sounds from what I can understand that you have 1 ) a racing condition and 2) maybe a carb situation where it runs poor as well? If the governor is adjusted as it should and the only way you can cause the engine to run a slower speed by holding the throttle linkage- your problem would be internal.

A small gear inside the machine is busted. I had this same problem a few years back with my 20 hp B&S V twin.