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If it's being bogged down by the generator, it's either mechanical or an electrical overload. I doubt it's mechanical, since you would hear that and most likely see sparks. To rule out a generator internal electrical problems I would disconnect the voltage regulator, and tape off the leads, then...

Question: You say - when manipulating throttle anything over half throttle it dies out - Are you manually holding the throttle to start the engine? On the 531's, the throttle lever is either on - latched, or off -tripped. Some things to think about: The pegged hertz gage - do you have a way...

Have you tried removing the stainless steel spark arrester on the muffler. If that is plugged it could cause too much backpressure at full throttle. This is the easiest test before you dig into the machine further.