I checked and it is indeed as you said. Moving the pot changes the voltage 0-12V. How would I make the PWM go low enough to see the difference of my fan speed?
Actually, this is good news since it goes to 0V.
That means we need to see if the MOSFET is working properly.
The only odd thing I see is that R1 is 1K.
Usually, 100ohms is used for a gate resistor.
Also,
on some loads, a PWM duty cycle of, say, 70% to 100% doesn't translate into a visible effect (ie. looks like it's fully-on).
A visible change only occurs when between 0% and say 50%. The way to lop-side the control is to add a resistor (100K) between D3 anode and the potentiometer pin 3. The frequency will be about 600Hz buts that's okay. You'll have finer control with the pot.