I have the same problem. The lowest 2 settings are completely useless, it actually starts binding and lifting the tractor. The lifting rod on the right side is solid and the left side has to be adjusted to match. I can only get 3" in the highest setting with the front of the deck completely level with the back. Even though the tractor was advertised as having a maximum cutting height of 4". Recently, on this forum I think, I read there is supposedly a secret adjustment that you have to look for. I don't see it, and there is only 1/4" gap between the frame and the deck, the belt already rubs the front of the deck, and there is less than an inch gap between the deck and the right rear tire. :confused3:
I think the easiest way to get that last 1/4" would be by replacing or modifying the notched plate for the lift lever on the fender. Or just remove the plate and tie the lever all the back.
I've also thought about trying to add "lifting" blocks between the frame and transaxle, but I imagine that wouldn't make the drive belt happy and it would give the transaxle a longer lever to work on cracking the frame in the future...