Surging is almost always caused by too lean mixture.
But do check the governor linkage.
With the dash lever at mid position, engine off, feel for excess slack in the link between the governor arm and the carb. Be sure the throttle shaft is not worn in the carb, be sure the arm is attached firmly to the throttle plate shaft.
With the dash lever at idle, the throttle should be held firmly against the idle stop screw, and no slack on the rod from the governor arm to the carb.
With the dash lever in fast position, engine off, the throttle should be spring loaded to the full open position.
If everything checks out, move on to the carb adjustment.
But first! Make sure everything else is right. Check the distributor, check the shaft for side play. If there is any side play the points will not stay set and will do strange things. Be sure the centrifugal advance is free, the springs are intact, and it is working. Check all other ignition components, if any doubt about the wires or plugs, replace them.
If the valves haven't been set in a while, now would be a good time. While the tank is off, wash it out with some E85. Once the tank is back on and filled, pull the rain plug on the carb, catch the flow. It should have a steady flow, not slow to a drip or stop. Look at what came out. If the tank was contaminated, the new carb will be contaminated. Might need to ease the bowl off and give it a good cleaning.
How is the air cleaner? There is a wire mesh inside, often overlooked. It needs periodic cleaning. If it's severely caked with dirt it will need to come out and be cleaned or replaced. It's a bear to get out, but if clogged it has to be done.
Is there a thermostat in the upper hose? If not, it will help with performance and keeping the oil clean and plugs burning clean.
Even with all the prep work, if the engine is tired, low on compression, the worlds finest carb still will not work. It all has to work together to be right.
Once everything is ready, then adjust the carb.
Start with the idle. The engine needs to be idled down to 400-500 RPM, no faster. Turning the idle screw in richens the mix, out leans it. You are adjusting air bleed, not fuel flow. Turn it out to falter, back in to best idle. The adjustment is minimal, but it should make a difference. If not the idle passages may be clogged, there is a vacuum leak, or the idle is too fast.
Then adjust the high speed. Start with the screw about 1 1/2 turns (gently) off the seat. With the engine at idle, quickly open the throttle. Listen to the response. The engine should take sudden full throttle without hesitating. If it hesitates, back the main screw out 1/4 turn. If no hesitation, turn it in, repeat the test until it does, then start backing it out, repeating the test until it will take throttle without hesitation. A single puff of black smoke is the goal.
Once adjusted, check the max governed RPM. With the dash lever in full fast, the engine should be about 2000 RPM. If it is not, loosen the U bolt above the generator, rotate the lever on the shaft until the RPM is right, tighten it down.
Let us know what happens...
