MT,

Try a Voltage Drop Calculator and you'll see that with the 50 foot extension cord, you're dropping the voltage that probably doesn't affect the generator as does directly plugging in the welder.

For your example, I plugged in copper wire, 12 awg, 120 volts 1-phase, 50 feet and a 20 amp load. The calculator estimated, your voltage dropped to 116 volts. 2400 Watts - 2320 Watts = 3.3% drop in voltage

Now if you were to say a 30 amp start-up surge, I plugged in copper wire, 12 awg, 120 volts 1-phase, 50 feet and a 30 amp load. The calculator estimated your voltage dropped to 114.1 volts.

3600 Watts - 3423 Watts = 4.9% drop in voltage.

Now if you were to say a 35 amp start-up surge, I plugged in copper wire, 12 awg, 120 volts 1-phase, 50 feet and a 35 amp load. The calculator estimated your voltage dropped to 113.1 volts.

4200 Watts - 3958.5 Watts = 5.8% drop in voltage.

My guess is that you're drawing close to 35 amps at start-up when directly plugged into the generator and that's why your having to reset and lower the setting from 4 to 3 because without the extension cord, you've max out the generator.

http://www.electrician2.com/calculators/vd_calculator.html
Dang, I am up too late and I don't even know if this is applicable to draws on an extension cord or much about electricity

http://motorbicycling.com/images/smilies/mixed-up.gif
Good Luck,

Chris

AKA: BigBlue