You didn't mention the hours/years on the engine. If all the external work you've done is proper and there is no excessive wear in the governor/carb linkage, I'd suspect you may have some wear in the internal governor assembly. The plastic ball guide has two bosses that sit in recesses in the cam gear--I've found one or both sheared off. It's been too long ago for me to recall the running condition with one boss sheared. With both bosses sheared, I could set the governor but the rpms would continue to climb uncontrollably. If you decide to crack the engine open, look for any galling in the governor plates as well. http://kmcb2c.econnect.partsandwarr...tType=2&historyDepth=3&CHANGENUMBEROFITEMS=63 Is the spring on the governor/carb link intact and attached?