Have you tried adjusting the carb a little richer? The engines are preset at the factory but still need to be adjusted for where you live.
If you're running the stock prop, they throw a lot of water upwards as in a roostertail but don't have a lot of speed.
Why you are getting the stream of water upwards once it stops has got me stumped. Are you saying that the engine is still running when it is tossing the water? That's cavitation. Try giving the boat a toss level to the water when launching to see if that helps at all.