The shroud is a 1978, and from a snowblower, but it most likely does not match the engine, For that you want to look at the tag that is screwed down over the TC on the cylinder air deflector. you will probably want to research both numbers though and compare whats actually there, if you go deeper into it after what you are working on now, since there will be a difference between Snowblower and Recreational setup in parts/seals used, plus it can give you an idea of what they actually swapped around.
To bad they screwed up and rigged that intake to the block, they actually had the right combination in parts to work with and could have simply used a threaded insert to fix the thread and the proper gasket would sit correctly and seal correctly and not weaken the setup. common sense is not that common when it comes to small engines though.
The rod between the gov arm and carb is causing the bind. in a slanted application the position is a bit different than a standard setup to that rod, many times it will need to be tweaked/bent to fully clear the throttle shaft as it rotates from idle to WOT, tweaking/twisting the governor arm as well can help too. It is important that the upper assembly does not have to rely in any way on the lower spring to throttle cable return assembly. The tiny spring on the throttle shaft of the carb should be more than enough to quickly and smoothly snap it back to idle position, no hesitation.
The gasket they shoved in the intake is actually the HS50 exhaust gasket, It probably bottomed out with just that homemade gasket on that bolt or something and they rigged that gasket in to take up space...Get-R-dun. you will always have fitment/sealing issues since they reamed the hole so large on the intake for that bolt taking away what little surface area the proper gasket had to work with in the first place, so take your time to true out imperfections on the flanges of intake and block, double check the intake and upper drilled threaded hole for cracks, that may pass into the port if the drilled to far (looks pretty rough in the pic) modify the correct intake gasket to fit as best it can with that larger bolt if you going to keep using it, make sure you get the fine line of bolt length correct so you get maximum threads in the hole without bottoming out, etc....
Dont forget to maybe focus on the exhaust header as well, since its for a n HS40 specific and Not and HS50 is leaking badly as well at the flange..