Surging is an indication that the carb's low speed circuit has a fuel restriction.
When the throttle valve closes the engine is not getting fuel, when the RPMs drop the governor opens the throttle valve, it draws fuel from the main (high speed) jet and the RPMs pickup, then as the RPMs get high the governor closes the throttle valve and it runs out of fuel, and the process keeps repeating. This is why it surges. When you close the choke a little it cuts off the air supply and forces the governor to open the throttle valve to compensate, getting all of it's fuel from the main jet. This is why it smooths out.
The angled screw with the spring on the top side of the carb is a low speed mixture screw and can vary either the fuel feed or air bleed (depending on the carb design), but typically the fuel feed. The low speed mixture exits through a tiny port on the engine side of the throttle valve. The engine gets ALL of it's fuel through this low speed port when the throttle valve is closed. Turning the mixture screw clockwise richens the low speed mixture and might cure the surge.
Many years ago when I was a young lad and started working on mechanical things, an old mechanic told me something that has always stuck with me... "You have to know how something is supposed to work in order to figure out why it isn't working".