Is the linkage the same as in the manual's illustration, Paul?

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I'm asking because I can't see the choke linkage in your picture, but it is shown in the illustration. You now have the spring in the correct notch according to the diagram.

You have reported that the governor is cycling, but with some new and very important information: the spark plug is wet, and fuel has been spraying back through the carburetor onto the air filter. I think this makes it unlikely that the problem is lean mixture. My new guess as to what is wrong, is based on that piece of information. Let's go back to the Tecumseh diagnostic procedure for governor-cycling:
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When I read that the first time, I thought it was a clear admission that the performance of that governor is marginal at best, and it is prone to cycling. Now that you have said that the plug and air filter are wet with fuel, a possible explanation comes to mind. When the throttle opening increases on a carburetor, a design feature called "acceleration enrichment" comes into play. If the throttle actually flutters, the mixture is likely to become very rich. So, what I suggest you do, is follow Item 1 in the diagnostic: hold wire link between the throttle and governor arm perfectly stationary with a pair of pliers, and see if the engine then runs steadily, and changes speed when you move the throttle slightly. If it does, you will have proved that the problem is governor instability. Of course we then have to try to figure out the cause of the instability, but at least we'll have a focus.