Hi Nick
Sorry for such as late reply but I've been working on my boat and only just got things finished.
If you take some photos further out and from different angles showing the whole boat that would be good.
Without seeing how big the boat is it's pure guesswork but she looks about 16-18', she's not on a braked trailer so total load including trailer under 750kgs, therefore I would say a 25hp would push her along quite well, maybe get her on the plane, but not racing speeds and certainly a larger engine would be be better maybe a 50 or 60hp or even a standard Mercury 25, I'll explain later.
Where to start........
If you can, let us know what your current prop size is?
First of all have you tried to trim her to get on the plane? One of the reasons boats sit low in the water at the stern is motor trim and trying to get over the hump, i.e. the bow wave. Does the motor have power trim, if so, trim the motor in and see if that helps? If it does, once on the plane, speed will increase so you can trim out again. If you dont have power trim, bring it in manually to the next slot.
If you have 2 people in the boat, sit one at the bow and open her up quickly to see if you can get over the hump. If you still can't get her on the plane, you either have power issues or as you've already mentioned, prop size too big.
Now to the prop. Mercury Big Foot engines are actually designed to spin the props slower but with a larger prop than the standard Mercury engines, because the gear ratio is lower. So without seeing her in action, again this is guesswork.
Boat propellers are measured once you can count revs at full throttle (WOT, Wide Open Throttle). If an engine inboard or outboard has WOT at say usually 4,400-5,000 for inboard and 5,500-5,700 for an outboard (outboards tend to run higher revs). Lets talk outboards though, if you are only getting say 4,800 on your outboard then your prop is too big. If on the other hand your engine revs quickly and reaches WOT early and reaching 6,000 rpm, but the boat is going nowhere, the prop is under sized.
I hope this helps a little to start with.