So on the subject of air cooled Governor adjustments I have some interesting facts I just learned the hard way...
I was working on an 002a a few days ago, prepping it for sale and noticed the droop was beyond acceptable limits.
It would droop about 1.5 Hz for every 1Kw of load applied.
I lowered the spring a little bit with oddly no change to the droop, but also noticed that the throttle lever was now hitting the stop screw and I needed to back the screw out a bit to get back to 60Hz. I lowered the spring all the way to the bottom yet still no improvement with the droop.
This gen originally had a PSU pump with a broken plunger and I had replaced it with an Ambac but never checked the timing button, so I did and found it to be off by 2 sizes. Changed to the correct button and still unacceptable droop. The odd thing was that I could rev it up under load with my finger under the throttle linkage and I also noticed that even with the governor spring all the way at the bottom I was still not getting any hunting.
So I knew it was not an issue with injectors or the IP, it had to be a governor problem.
After close comparison to another air cooled machine I noticed differences in the adjusted length of the spring loaded lever coming off the IP and differences in the height of the tip of the governor linkage arm ( the main arm that goes from the timing cover up to near the stop solenoid) in the stopped position. Turns out the lever arm was slightly bent just above the star wheel for the governor spring , causing all these problems.
I replace that arm with a spare and no more droop problems, she holds 59 Hz at 6500W with no problem now!
As for the OP's question, Chainbreaker's picture is pretty accurate, maybe 1 notch higher than what I typically find to be the sweet spot, but pretty close.
9 times out of 10 you end up wanting to be at about the 3rd groove up from the bottom, but follow the TM and you will easily get it dialed in.... unless anything is BENT!