Hunting and surging is a tell-tale sign of lean fuel mixture. The dark brown head and Piston also tells the tale. I don’t care what the manual says for carburetor base settings. They’re wrong most of the time even in the best English translation.

Every fuel along with every oil composition/blend smokes differently. Color, amount, etc. ignore it altogether. Temperature is just a reference.

Your prop is probably too big too. Run a 1” shorter diameter prop than the intended flight prop, run oilier fuel, and get it up to rpm. Richen until it 4-strokes; let run like that for 30 second. Lean it until it just*** cleans up with the occasional miss for 1 minute. Alternate between rich and clean for a tank of fuel, all at WOT. Run another few tanks at WOT at the rich 2-stroke running with occasional miss. Give it 30-40min and then fly it rich on the shorter prop until it will hold a lean needle setting without sagging or surging.

This regimen has never failed me.