Briggs 10 hp surging

I have a 10 hp Briggs L head vertical shaft engine on my old Montgomery wards off-road mower. The engine is either an 1981 or 82 and runs well except for a severe governor surging issue. I've had this issue since I bought the machine a year ago. When I got it someone had completed messed up all the governor linkages and had the governor arm loose on the cross shaft. The previous owner had tried to work on the carb but couldn't figure out how to put it all back together. I went through and restored all the linkages to factory position and synchronized the arm with the cross shaft. I have work on these engines countless times and know I have everything adjusted correctly but I am still having the surging.

The engine runs fine under a steady load or no load but as soon as I let the clutch out it starts rapidly surging from full throttle to idle at probably 3 times a second. It will even out eventually if I keep a consistent load on it but any change throws it into a fit again. If I hold the governor arm with my hand it runs flawlessly but as soon as I release it it surges.

This one has me really stumped as it is obviously not a carb issue as it runs fine essentially ungoverned but the governor just refuses to cooperate. I replaced the spring with no success. The only thing I can think of is possibly a damaged set of flyweights or something internal. Is it possible since the previous owner ran it with the cross shaft loose from the arm that it damaged something internal? The engine definitely burns oil so I'm not willing to spend too much money or effort on fixing it but I am willing to try anything reasonable. If it comes down to it I may have to convert to a ungoverned setup.

I'd go with ungoverned, at least until you get a chance to delve inside and check out the internals.  Your brain can easily do what the governor does ~
1. Stop revving too hard or it'll Blow Up.
2. Give more juice if it's about to conk out (foot or twist throttle needed).
Sounds to me that you understand governors better than anyone anyways