Working on a 1995 7.4L 330HP engine with Thunderbolt V ignition. Here is what I have replaced, Cap, Rotor, pickup coil, Coil, plugs. Only thing left is the ignition modual ??? Engine runs smooth, does not idle rough and does not have a miss. I can pull full RPM at times. Seems to vary by about 300 RPMs when it surges. I would just replace the modual but they want a huge price for it. 806959 is the part number.

how olds the gas and when was the fuel filter changed last?

Good question, but defiantly not fuel related. New fuel filter, rebuilt the carb and fresh gas.

I am working on this boat for my brother. If I knew what I know now I would have dropped in a DUI and called it good.

Does it surge at idle ? Or a particular rpm when under load ? Or all rpms under load ?

Pull the distributor and see how much end play there is. I bet a lot. Or take off the cap and crank the motor over and watch the rotor jump up and down. The gear on the distributor is probably toast as well.

put a timing light on it and see if the timing is moving with the surge

He'll have to put it in 'base mode' or what ever it's called. He has the Tbolt V, which constantly moves the timing around for what they call 'mean best timing.'

Not as noticeable at idle. More prominent under load, does it at all RPM. I have not water tested with new plugs yet but they looked good.

Again this points me toward the ignition modual.