Kohler keeps flooding

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Here are some items to check.
1. Check air cleaner -clean or replace
2. Choke partially closed when running - check choke linkage and operation
3. Low idle fuel mixture - adjust low idle fuel needle
4. Float level is set to high - check float setting
5. Dirt under fuel needle - clean or replace aasy. if bad
6. Cracked or leaky float- check if liquid insde float
7. Bowl vent or air bleeds pluged- blow out passages with air
This is according to the service manual http://www.kohlerengines.com/onlinecatalog/pdf/tp_2428_b.pdf.
I would check your needle and float and air cleaner ( a dirty air cleaner will act like the choke is on causing a rich mixture).
I hope this helps.

Are you sure it has a carburetor as some of those are fuel injected? If it is fuel injected it will have a ECU and will have stored a trouble code. Let me know and I will tell you how to retrieve codes.

In order to properly diagnose this we need to know if this is happening in idle or high rpm? As far as your fuel shut off being closed and still running means the fuel shut off is faulty.
Lets say your issue is in high rpm... The kohler command has a fixed main jet so the flood issue would be no spark or restricted air flow.
Lets say its low idle. Could be a number of things. If the float was too high or the pressure was too high, there would be fuel running across the throttle linkage.
I would make certain your getting enough spark. There may be a problem with your plug wires, spark plugs could be the wrong gap or heat range, incorrect timing gap, And like Doug suggested air filter, choke etc. could be lots of things.
Also, the fuel pressure should be 3 psi. You definately have more than one issue going on.

I don't know if this is of any help and I'm not too smart with small engines, but my first truck mount used a fuel regulator that sounds a whole lot like the one you mentioned and it gave me a lot of trouble. I had to replace it several times in just a few years. I did find that Napa Auto parts carried it a lot cheaper than my supplier did. If it's not working properly it will let way too much fuel through and flood your engine. My regulator was a dial type with 1 to 5 settings like you mentioned

bypass the regulator,
Check to see if your vehicle has a presurized fuel system or a vented fuel system. Easyiest way to check is to look at your gas cap all vented systems say "VENTED"
if the vehicle it is installed in is fuel injected with high pressure fuel pump.
The chances are... it is also pressurizing the fuel tank, and will go through the weakest point. the TM's carburetor.
A quick remedy is to open the vehicles gas cap. if it whooshes out air, its pressureized and you need to goto interlink or jondon to get the right fuel Tap for your vehicle.
hope this helps. if all else fails. blow compressed air through the tms fuel line. It should blow out any debris in the float needle system