It's much easier to tell in person, but have you tried routing the chain around the pulley wheels in the opposite order? I once (or maybe twice) set a rear derailleur up with the chain routed around the pulleys in the wrong order, and it sat kind of like that. It's quite a common thing to do on a first set-up.

If that's not what happened, see if there's a catch holding the end of the spring. It might possibly be not catching on the right spot - or, it could be that the spring inside the pivot is shot. If it's the last thing, replacing the derailleur is the most expeditions path to follow.