What is the supply voltage on Pin 2?
If the diagrams on the data sheet are correct, the output is from an amplifier, and you should not need the 10 kΩ resistor. What voltage do you see when you remove that resistor?
The 0.7 V that you measure makes me suspicious, because it is the forward voltage of a silicon junction. According to the data sheet, without the load resistor (the 10 kΩ), the output should go from 15 mV dark to (VCC - 10 mV) maximum.