Sorry, but your muffler is in no way a problem. It is a frustratingly persisting myth that engines "need back pressure". It is just not true. Off hand, the only benefit I can think of to back pressure is on a glow engine, to help keep the glow plug hot at idle, and this comes at a sacrifice in power. Before anyone says "what about an expansion chamber or other tuned exhaust?", those operate on reflected sonic waves, NOT back pressure.

Keep after that regulator lever adjustment, it is critical. You might also have a look at the high speed check valve in the carb

You might also beg, borrow, steal, or make a pop off pressure checker and do a pop off pressure check.

Edit: Last thought..... You are putting the regulator chamber gasket on first, and then the diaphragm on top, then the cover right? Lots of people put them on backwards, then have "too rich" problems.

AV8TOR