I can only guess, but if the cable had come off of the VTS lever then possibly the nozzle was free to move and would angle upward under thrust?
Sorry I can't help with VTS adjustment. On my Challenger with the VTS lever in the neutral/middle position the nozzle was just slightly upward. I never adjusted it because it was very close to level with the lever in the neutral/middle position and I assumed this to be correct (made sense so I left it alone). I didn't experience much of a difference with the VTS adjusted downward when attempting to get the boat on plane, but if the VTS were in an upward position I think it would make a bigger impact and make the boat harder to plane with a load onboard.
Hopefully getting the VTS linkage connected and adjusted will solve your issue. Good luck with it.
BTW...due to the layout of the Challenger, all the weight in the back of the boat, I never filled the 27 gallon gas tank. The boat, in my opinion, was pretty good on fuel and I couldn't see me ever coming close to needing that much fuel in the boat for a day on the water. So if you trailer the boat and pass by a gas station on your way to the water, I would recommend keeping just a bit more fuel than what you'll need for the day...don't short yourself, but don't over do it either...weight capacity on these boats doesn't leave much room for extras...just my two-cents.