That rod is the 'excess fuel button'. What it does is push the maximum fuel delivery stop out of line with the fuel rack so it no longer stops the rack's travel... and this allows the rack to travel to maximum extension for cold starting. The way you describe it.. I think it's working correctly and everything is free in the pump.
It seems to me that you have a fuel delivery problem or lack of transfer pressure. I'd start at the filter. Remove that and see if you have flow from the tank. If you don't, trace back and see why not. Install a new filter... then bleed the filter using the hand primer. If it doesn't shoot fuel out the bleeder eventually then you most likely have a bad lift pump. It also helps greatly to make sure you have a FULL tank of fuel so the system will more or less gravity bleed. Once you get fuel from the filter head bleeder, close it up and then open all 3 injector lines at the injectors... and continue hand priming with the throttle advanced and the shutoff pushed in until you get some fuel, then close them up and attempt starting.
Honestly, what I most often do after bleeding the filter head is just crank and feed it some ether with the throttle wide open... and be QUICK to knock the throttle back or shut it off if it takes off too violently.