On June 22, 1998, at 1100 central daylight time, a Cessna 150G, N8450J, impacted the terrain and was destroyed by fire during an initial takeoff climb from the Rush City Airport, Rush City, Minnesota. The private pilot and passenger received serious injuries. The airplane was being operated as a personal flight under 14 CFR part 91 when the accident occurred. The flight was departing at the time of the accident and was en route to Sioux Falls, South Dakota. Visual meteorological conditions prevailed at the time and no flight plan was filed. The pilot reported that he did a run up at the end of runway 34, and prior to take off he "inadvertently" set the flaps to 20 degrees. He reported flying in ground effect for about 600 feet prior to climbing to an altitude of about 30 feet above the ground. He reported the airplane then stalled and veered to the left. The airplane impacted the terrain and a post impact fire ensued. A witness to the accident reported seeing the airplane flying at a slow speed with a high angle of attack. The witness reported that it looked to him as if the flaps were extended 40 degrees. He reported the airplane was crabbed about 35 degrees into the wind and the engine was running "fine." He continued to report that airplane stalled, the left wing dropped, and the airplane descended to impact with the terrain. Inspection of the airplane by an Inspector from the Minneapolis Federal Aviation Administration Flight Standards District Office revealed the flaps were in the extended position. The flap actuator was measured by a representative of The Cessna Aircraft Company. He reported the flap actuator was extended 4.8 inches which correlates to 29 degrees of flaps being extended. The pilot reported he was used to flying a Piper Cherokee and "incorrectly thought that just like a Cherokee a 20 degree wing flap [setting] would shorten [the] ground roll."