when excatly does the surge occur? just off idle? when driving? at which speeds? what happens if you accelerate hard?

from what you have described it sounds like you have a fuel delivery problem.

besides: i like to run a little more advance then 5° btc. i run 22° initial, but then again i have a low comp engine. with your engine i'd probably aim for 15° BTDC. you will get a better idle and better throttle response.

however, that might require adjusting the mechanical advance on your distributer.