3 GM Yanmar
Attached is another couple of pages from the governor chapter for the 3 GM..
note the taper pin attaching the governor lever to the shaft.. shaft may be loose? also check the spring pins attaching the lever shaft support.. The match marks on the Inj Pump control rack must be matched to the pinions on the plungers (as Claude A. stated).. if the rack is out of position, the governor won't have enough travel to slow it down.. your finger would probably have more travel..
When you moved the rack by finger was the governor arm 2 still attached?If so could you feel the governor trying to counteract your finger control?
EDIT: Note that the stop lever bypasses the regulator lever and springs and its cam pushes directly on the tab of governor lever 2 in the drawing, pushing the fuel rack back to stop fuel flow. Since that is pushing in enough to shut down, suspect some kind of looseness or disconnect between the flyweights and the governor lever 2 ..