Thanks for everyones help. Thumbskull, I am running the stock power box muffler. I have disassembled the muffler several days ago and checked for plugage in the pressure tap - it was as clean as a whistle. As far as how new the engine is, it is relatively new (purchased at beginning of season). It was broke in on the ground per procedure using over half a gallon of fuel. The engine has had about 30 flights on it.

Sport_Pilot - I think what you said makes the most sense. The engine is surging up and down just like you explained. This would indicate poor fuel draw at mid range. The engine should be getting good draw though as the tank is installed dead on center with the carb and just behind the firewall.

Bax, I did that procedure. Started stupid rich on the idle mixture at approximately 90 degrees richer than the original factory setting. I then set the high end needle just on the rich side of where it ran at max rpms at full throttle. Then I backed off to low rpms, then increased rpms to mid throttle and listened to see if it would surge/run poorly - which it did. Then, I leaned out the idle mixture approx. 15 degrees and repeated the previous steps checking the engine at mid throttle. I did this all the way through sloppy rich to mean lean on the idle mixture. No matter where the idle mixture was set at, the engine would always surge at mid throttle. It did seem to be somewhat better at approx. 90 degrees leaner than the original factory setting, but not anywhere safe enough for me to trust it in flight!

So, I am thinking a Perry pump might help. Do you think this is worth trying?