As you have witnessed there's an great timing difference between idle and wot when the gear level has not been put to forward.
Some issues : have that motor since brand new or its a second hand one, to know if the timing advance has been messed with. Is it a tiller or remote installation ? Who has changed the standard fuel hose for that one which is darn thick, could be producing already a fuel restriction (pic 2) and a throttle shaft restriction (pic 3) as well. Would suggest replace current fuel hose for an OEM fuel hose or other with much less diam and not routed that tight than current one in pic 2, check original OEM fuel hoses.
View attachment 338436
Idle Time Advance :
Need to loosen nut and turn screw CCW for the timing plate to stop at 0ª, once there with a screwdriver holding the screw head, adjust back tight the nut.
View attachment 338437
When timing advance is set to 0º will need to backup the idle rpm to lessen it a bit to a point that when geared forward there's a dry clak sound when gears are turning the prop forward and the motor doesn't shut off, if does adjust slight more the idle rpm screw.
Wot Time Advance : Its near perfect set to 25º
View attachment 338438
There seems to be a hose restriction against the throttle shaft...
General issues :
The M40C uses NGK : BR7HS-10 or B7HS-10 gapped tight to 1.0 mm, the feeler gauge sheet must not fall from the electrode. That motor and the M30 compared to other 2 strokes revs bit nervous at idle, the new timing advance should compensate a bit. Check if the mixture screw is well set.
Let me know if once the idle timing rests at 0 the WOT timing stops at 25º. All my Tohatsu motors have their idle time advance set to 0, shortens the throttle dead range at the beginning of the throttle grip and accelerates way faster from 0 to whatever throttle you like running.
That's an old near bullet proof motor mechanically speaking, check if the new idle/wot time advance and the less diam fuel hose bettered all the described naughty symptoms.....LOL!!
Happy Boating