I would set it at 10 BTDC at a 700-750 RPM idle, with vacuum. You should get 32 degrees advance at 3500 RPM without vacuum.

You can probably fix your surge problem with a new O2 sensor. It is probably a Bosch single wire. It sounds like the present sensor is weak, which makes the computer think the mix is lean, then it over-corrects, which causes the surge.

__________________
Chuck Taylor
Falls Church VA
'66 200, '66 230SL, '96 SL500. Sold: '81 380SL, '86 300E, '72 250C, '95 C220, 3 '84 280SL's '90 420SEL, '72 280SE, '73 280C, '78 280SE, '70 280SL, '77 450SL, '85 380SL, '87 560SL, '85 380SL, '72 350SL, '96 S500 Coupe