The choke knob is actually a dual function choke and primer system. As you pull it out all the way it is injecting fuel into the intake (it's like a syringe) this is the primer function. if you release it from that position it should go back in most of the way by it's self with the red ring at the base of the shaft still being visible, this is the choke position. after the motor has warmed up a bit you push the knob in all the way, this is the running position.
Procedure...
1: Make sure the fuel line primer bulb is hard
2: Pull the choke / primer out all the way, it's spring loaded so you have to physically pull on it, by doing so you will be injecting the fuel into the intake, I always give mine 2 pulls.
3: After releasing the choke / primer knob it should naturally go to the choke position, after running for a short period of time, push the knob in all the way in, you are now in the normal running position.
Let us know if this helps.