It's not nesessisarily planing off; it may just be settling out. If you picture the angle of the prop in the locked position you have it in, it's going to raise the bow on take-off, then as you pick up speed, it will settle in. Without seeing/feeling the boat in the water, I can't tell if it's planed off or not.
As far as running it like that, it's not that bad, maybe just lose some MPH and some MPG. If you are pushing water instead of riding up on top, your motor isn't as efficient.