Completely stumped - surging craftsman LT2000

Hello - ok I am completely stumped and need some help with this mower!

Here’s the background:

I picked up this mower (Craftsman LT2000) for cheap and it apparently hadn’t been run in about 5 years so I was thinking it would be an easy flip — boy was I wrong. Here’s where I’m at…


Initial problems: Once I figured out a janky electrical system where the motor would finally crank I discovered that it would start and run but would surge heavily with extremely large amounts of blue/white smoke. I drained + cleaned the gravity fed fuel tank and installed new fuel filter and fuel lines.

Fix: I drained the oil and found that it had a ton of gas in it. This was causing the breather tube to puke oil into the carb and thus smoke like crazy. I drained the oil, put some new oil in there and that seemed to fix the surging with smoke. I suspect a bad carb was to blame for the initial flooding of gas into the engine. So I installed a new carb and tried again. I also took apart the breather tube + inspected the reed. Appeared to be working normally.

Current issue: Engine starts right away but will almost immediately start surging severely. If I hold the carb throttle plate steady it will steady the RPMs but I can tell it’s still not running right and it will eventually die. Also notices it will blow fuel out of carb as it’s starting to die. Not sure if this is a symptom of engine dying or if this is a clue to what is going on. 

Things I’ve tried:

Fuel system: Cleaned fuel tank, new fuel lines, new fuel filter. New Carb + gaskets. Also ran engine with fuel tank cap off - no change in surging.

Engine: Took the head off, new head gasket. Valves seem to be seating correctly (I verified by filling top of head with water and checking for leaks. Valves opened and closed normally from what I can tell. I reset the valve clearances to .003(intake) and .005(exhaust. Push rods seem good and look to be opening up valves normally. Compression tested to 130 after a few turns of the crank.

Electrical: Filmed engine in slow motion with spark plug laying on block to verify spark happens every time flywheel passes magneto. This checks out. One weird thing I noticed - when I disconnected the magneto kill wire and ran the engine I was still able to kill the engine with the ignition switch. This seemed odd to me as I was expecting to have to kill the motor with the choke when that wire was disconnected.


Thank you for your help, I know that was a lot but I am completely stumped and have tried everything I can think of. What am I missing???