Phantom,

If that were the case, first and second should be locked together. With the buggy off try spinning the big gear in the transmission back and forth. If it moves without the small gear moving, I would say that it is not locked in 2nd gear. Low end torque could easily be explained with tuning. You could try screwing the low speed and the high speed needle 1/8 turn clockwise and you should notice a jump in the low end.