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Shortening the governor spring will make the engine run faster - not slower. Assuming you are shortening AND aren't also stretching it before reassembling it to create less resistance.

Based on your info, sounds like the timing is off so if the flywheel key isn't sheared as per your report, could be a broken camshaft. The Camshaft shouldn't break unless you hit something and the camshaft gave instead of the shear pin. I would make sure the valves are properly opening and...