You’re going to have a voltage drop from the power source to the driver. It’s best to test and set CC drivers using the exact power supply you’re going to use in the end installation.
If you’re inputting 3.7V, then that’s definitely too low, 3.7V is essentially a near empty Li-ion. You should apply 4.2V to this driver, and you really should do it using an actual Li-ion battery, with the same length and gauge wiring you’re going to use in your laser pointer, this will allow you to have a much more precise setup.
With 4.2V in, and if youre going to use a bench power supply, then set the CC limit to 2.5A, as it states in the specs. You should be getting 5.5-6V output with a max current output of 1.8A/1800mA.. also, if you’re going to adjust the current via potentiometer, it’s best to do this with the power OFF, those things are sensitive to getting shorted if you’re not using a plastic/rubber handle screw driver. Be careful when turning that PoT, cuz they are cheap and can easily pop off and break. I like to adjust them, with the power supply OFF/disconnected, using a flat head screw driver, and very light pressure, making small adjustments.
You also have to make sure your dummy load is setup properly to pull the current your trying to adjust for, obviously.
Hope this helps.
You should post some pics of your wiring setup and how it’s all being hooked up.