UPDATE: Finally got to the root of the problem. After running a spectrum on the motor. It showed the prop was way out of wack. It was hard to feel in the airplane because I had installed the Hot rod muffler and the sound was so different we thought it was that. But it was the prop causing the sluggishness in the throttle. Installed my old prop (same pitch) and it made a huge difference in sound and smoothness and throttle response.
Thanks again for everyones help and advice. I hope my finding will help someone in the future!