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You might try using a peak reading meter also. The Bird is going to show average power and with the key being that high it is sure to back up. It sounds like what LC said in needing a good alignment. Of course it could have been modded thus causing the higher key. Check the underside of the board around the final and make sure everything looks stock...no resistors, caps, jumper wires, etc.
D11 should not be causing the problem you are seeing. That is just taking the mod clipper out of circuit. It should make it swing forward more with it out. Not necessarily sounding better but giving more forward audio. Also make sure that D8 (I think that is the number) by the audio transformer has not been jumped out. That in itself will make the key high.
The American Radio Relay League (ARRL) is the national association for amateur radio, connecting hams around the U.S. with news, information and resources.
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