My Craftsman compressor does not seem to regulate.
I got it for free and noticed that it runs constantly. It seemed to leak air from the regulator adjustment knob, which may be normal but I wasn't sure. The regulator also seemed to only match what was in the tank, 140 pounds in the tank, 140 pounds on the regulator gauge. if I turn down the regulator knob it just leaks air causing the tank to fill slower, and the compressor to run indefinitely.
Having a smaller 2.5 gallon compressor I didn't think this was right. The tank pumps up to 120, but the regulator gauge stops at what ever I set it at.
I replaced the regulator assembly with a model # D27253 off of amazon. Same issue.
Trying to use my finish nail gun at 90 pounds. Any suggestions. sticking with the 2.5 gallon for now, but I will be doing some framing soon and will need that bigger compressor working.

 

Is the regulator oriented correctly? Should be marked "in" and "out" or have an arrow on it.

 

I have seen regulators that will leak air when adjusting the pressure down. When adjusting the pressure up they don't leak but when going down it's bleeding off the excess pressure in the hose. Once it gets to the desired pressure it should stop dumping air.

You mention the pressure of the gauge but you have two of them. One reads the tank pressure and the other reads the regulator output pressure.

 

Sounds like the check valve is leaking at the tank.

 

The leak seams to come from the regulator knob.
My smaller tank does bleed off air when the knob is adjusted down. The problem with this one is it leaks continuously and doesn't seem to adjust the pressure. what ever the tank pressure is, the hose preasure seems to be.

 

Ugh, I just went out to check orientation, as AKA Pedro suggested, it is backwards. I'll correct this over site immediately and then firmly chastise the installer.