So it dies when you open the choke?
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Has the peoblem only just started? My first thought would be to screw in the idle screw a little but im sure someone will have a better idea as to whats wrong...
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What upgrades to the carb/exhaust aswell as the motor itself?..
You didn't circle the choke on that picture.
You circled the the lever that controls the throttle, not the level that controls the choke.
The governor arm will not switch the engine from choke to run,
You have to do that manually.
The governor arm is connected to the throttle, not the choke.
It sounds like the idle RPM is turned up too high.
If it is idling above the governed speed of 3600 RPM and you try to open the throttle, the governor won't allow it.
Try turning the idle speed down. It is a black plastic screw on the carb with Phillips-Head tip.
Otherwise, as always, check for leaks around the gaskets and disassemble and clean the carb.
I will probably buy new gaskets then