I ran some numbers based on a current model 40HP Merc 4S, which has a 2.0:1 gear-case, and I don't think they've changed since yours.
Your prop slip is approx. 55%, and since your WOT RPM is low @ 5200, that correlates. You should be in the 5500-6000 WOT range on that engine.
Running the calculation for a 14" prop, which would most likely attain the WOT RPM (I used 5800 for this calc.) you should see a noticeable improvement in launch, as it's a much lower ration prop, but your slip will likely come down (I ran a 20% for this calc., it might even go lower) and you should see about 31MPH WOT speed.
Those numbers are estimates, but what it is showing is that apparently that is a incorrect prop. Now, if that gear case is not a 2.0:1 and is something much lower (bigger number, it's a ratio) like 2.75:1 it's possible that is close to a correct prop as that gear case calculates out to a 39% slip - but even so WOT RPM is too low and that engine is lugging.
The best thing you could do is to get set up with a good prop dealer that has a try&buy program, get what you might think is a good starting point prop, try it, and see what you get. Then go up and down 1-2 pitches and see if it's better or worse. if it is better lower, go one more and see if it declines, if so, go back to previous, if better, increment again and compare. Prop selection is not a cut and dry science, it's trial and error with some guidelines.
What you're looking for is the lowest amount of slip (efficiency of the prop) that ultimately gives the best hole shot and top end @ correct WOT RPM.
As pointed out, hole shot can be managed (or miss-managed) by correct or incorrect loading (there is not black and white here either, it's trial and error) but a rule of thumb I've been given by boat builders is for a typical boat 1# at the bilge/transom equates to about 10# at the driver console and as much as 50# at the bow. Moving a few pounds of weight forward makes a major impact on bow loading, so moving that 20# anchor to the bow could very well change your take-off characteristics.
As for prop selection, usually going for WOT #'s first and then tweaking for hole shot is the approach most take, as generally a prop that runs WOT very well will also be capable of a decent hole shot given weight balance is managed correctly.
So, I hear your question: What size prop should I start with? Given what we know or assumptions (gear case ratio = 2.0:1) I'd start around 16" pitch, but using a try&buy so I can adjust and not cost an arm and leg! Yes, try&buy sometimes has a slight fee, but is definitely less than buying multiple props and then losing on reselling them if not correct.
Here's a link to the slip calculator I use:
http://bblades.com/propeller-slip-calculator/Hope this helps, I'm sure @bulletdc can chime in and fine tune the advise.