A view showing the underside of the hull and the transducer would be good.  In a lot of cases it's something on the hull causing the issue, especially as I think you are saying it works well at rest but badly when moving.

It isn't the bung causing it. Doesn't appear to be anything on the hull bottom either. Positioning out from hull centre looks to be OK. So a few things to check -

I think it is a smidgeon too high

I've had this problem on a past boat, it was just the face of the transducer facing slightly down so make sure the transducer is flat. Obviously any adjustment of the angle may subsequently need height adjustment

I must admit that I have not taken notice at what speed boat come up on plane, but that's when image deteriorates.

You say at higher speed the image deteriorates. Does it show black spotting all over, that appears to be interference of some kind. My Elite-5 does that. Faster the speed the worse the black spotting.

No I don't get what you are seeing on your unit. Mine is more like 'noise' or 'clutter'. 

OK but tranny is as low as it will go on track. Will have to refix it.

Adastra - the stuff I see looks like "noise or clutter" to me too. And - visually, I can see what looks like prop turbulence out where the transducer is.

 Is that your speedometer pick up is right next to the transducer?
 How close is it?
 If so that will most likely cause an issue.
 most outboards have provision to connect to speed o meter

 And agree
As per your new top photo, drop the back of the transducer down so it will be just under your straight edge, start there and see how it goes.

Go back up to the lowrance instructions above.. thats what they say

 Think of it this way.
 off the plane, or stopped the transducer is simply buried in the water , maybe 2 to 3" down.. nil air bubbles
 boat on the plain, there is no water against the back of the stern..  initially comes out on the line from under the hull surface, then slowly rises in an elliptical curve till eventually reaches normal sea level around the rear end of the motor cavitation plate (if engine has been mounted correct height)

you need the bottom surface of the transcducer.. generally 1/2 the thickness approx of the transducer to be in this flow of water ... bottom fully covered and not have any bubbles from
1/ air that maybe trapped from up the bow end and flow under the boat (could be a crack or defect or even a rib
 designed to flow trapped air under, or running back down the keel )
2/ Air bubbles forced back from the prop.. in reality even if mounted either side and far closer than recommended , when on the plane boat goes to fast to interfere.. but at idle speed yes.
This from your description can be eliminated.
3/ transducer mounted so maybe high and/ or flick up while on the plain, and rear section bottom surface is not fully under water.. has air.
4/ the leading edge is a mm or so too high, and can drag air under.

I mentioned above I had issues because of older keel type hull. I have the old mounts holes from what remained of some large trim tabs. Therefore did a LOT of real life playing with a lot of expert and non expert suggestions, with locations both sides of the motor without having to make new holes.
 If you have too much angle.. it usually works, must understand the sounder cone is not as square and directs further under the boat. I THINK not being very square with the sea surface MAY also distort fish sign readings. This MAY result in while not moving or slow drift  a lot of sign is not seen.. but seen as you move. (???)