where am I going wrong?

If the clutch is releasing & engaging OK with the adjustment there, that looks fine Dude, just toss the over-center spring from the pedal assy. as stated, you're good.

The over center spring is designed to assist the effort to compress the Borg & Beck
cover springs, which can get pretty cocky when You step up to one that can hold
a bunch of torque, if You simply pull the adj. link off You can easily remove the
spring. As stated, You can space the coils, but look & watch how the spring works.
Slightly depressing the pedal will bring the coil to it's fullest extension just before
it goes over center, space it, then w/the link out as per above, it will try to suck
the pedal to the floor. With the spacers in the coils, pushing it to the floor should
make it easy to remove.