There are several things that can be causing surging, both with the timing and with the carburetion. So its best to get the basics right before getting too involved looking for an exotic problem.
Assuming you have the oem cam in your motor (I apologize Tim, but I forget) I would use this as a starting point:
1. Set the MSD dizzy with the black advance stop bushing and 1 heavy silver spring and 1 light silver spring (18 degrees centrifugal advance all in at 3000 rpm).
2. Vacuum advance connected to ported vacuum
3. Static advance set at 18 degrees BTDC
Start the motor, let it reach operating temp, adjust the idle jets for highest idle rpm/highest intake manifold vacuum. Adjust the distributor (static advance) with the motor running by twisting it until you achieve highest idle rpm/highest intake manifold vacuum. Readjust your idle rpm with the idle stop screw. You may want to go back and double check the idle jets afterwards.
Hopefully this will result in a somewhat different setting of the throttle butterflies at idle and more intake manifold vacuum at cruise rpm, which shall resolve what I suspect is the problem. I believe with the current setting of your motor you are cruising at a spot where a carburetor metering circuit is right at the point of transition.
that last part is just a guess, but it is best to start with the basics. Motors with hot cams will call for more advance at idle, therefore more static advance. Eventually this will result in making the motor too hard to crank when the motor is hot. At this point there are 3 courses of action: (1) hook the vacuum advance to manifold vacuum, back off the static setting and recurve the dizzy (2) use an ignition that retards the timing during starting of the motor (3) tune the motor for less igntion advance at idle even though this means less than optimum motor performance at idle and off idle rpm.
cowboy from hell
