Tonye,
Remeber the reg. settings control the high end too. If you screw in on the reg. it will richen the low end and the high end so then you have to retune the high end to run properly. When you mention that the high end out more than 2 turns and you where surging at idel made me think the pump was too lean. But it sounds like at 1.75 out is pretty close. Usually it's something real easy to fix on these engines you just have to find it. I had a DZ 140 that ran great from idel to about 75% throttle and then all of sudden air bubble where coming out of the pump causing it to lean at highend. I rebuilt the pump and still same thing. It ended up being the pump housing was bad and I just replaced the whole pump and took the new parts out of the old one for spares. This engine now runs perfect and has loads of power. If you are sure about all the possible air leaks and all bolts are tight, just start over like it was new in the box with the reg. flush and 2 turns out on the high end and go from there. Seems like all my DZ 160's are about a half turn in on the reg. and 1.75 out on the high end.

Good luck
Larry