Well that looks like it kill it and I hate to be the bearer of bad news.

The shaft sticking out of the governor is should to be pressed in place right below number one cylinder as shown the image below. The problem is that this early model engine crankcase is NLA; therefore , you would need a new engine.
[Linked Image from i.imgur.com]
Red circle stud, Orange square bad spacer washer

[Linked Image from i.imgur.com]
Red circle stud location.