Engine runs until pressure reaches max (125 psi) then dies.

SOURCE: unloader valve keeps opening and closing

Sounds like the cutoff valve is failing to cut power off to the compressor drive motor, while it activates the unloader.--- I'd consider looking closely at the contacts, or replacing the cutoff.

SOURCE: its at 100 psi, im trying to push it up more but

When you want full pressure / volume from the tank, you will need to bypass the regulator. Easy task. Drain air from tank. Remove the safety pop valve (usually 1/4 npt thread) and install a tee fitting. Replace the pop valve on one port and install a quick connect on the other giving you full pressure when you need it. Good luck with your projects.

SOURCE: my craftsman air compressor #919176820 2 HP 12 gallon 200 max psi will not compress over 125 psi

If your compressor is oil-less type, most likely pressure is leaking past piston ring. To verify, remove cover to expose bottom of cylinder (unplug compressor and let out all air). With flashlight, examine the upper-most part of the cylinder (turn motor by hand till piston is at top of stroke). If top of cylinder is scratched, then pressure is leaking past.
For many years now, stores are in a race to have more HP and PSI to attract customers. Customer is really the loser because components used to make the units can not handle the higher pressure. Normally small 115v compressors are set to cut out at 125psi and larger two stage units will cut out at 160psi. Small compressor set to 200psi makes for short lived compressor. Could be compared to driving your car at 100mph all day every day. Longest life is attained when unit is being used at about 60 to 75 % of capacity.
To allow your compressor to reach cutout pressure and keep working for a while, lower cutout to 120psi (pressure switch may be adjustable). To restore to 200psi, replace cylinder/ ring.
If your compressor is oil type, suspect leaking reed valves.