From the pictures of the tailend sheave (Orange wheel) and the governor sheave (yellow wheel) the governor cable definitely has slack in it. This slack will cause the governor not to trip at the proper settings. The tailend sheave doesn't look to be bottomed out thought. The bolt in the center of the Orange sheave should move up and down freely in the slotted hole. From the picture, it looks to have more movement in the down direction. Is the bolt in a bind or stuck from the paint? If the slotted hole is deceiving and the tailend sheave (Orange wheel) is bottomed out then shortening it is the only option.