This unit should run regardless of the air filter fitted or not. The governor should compensate for the extra air to fuel ratio if air filter is not fitted. This type of engine has a known issue with throttle touching the front bracket of the carburetor assembly as shown on the photo. I suspect when fitted with air filter, it caused the bracket to slightly flex and free up throttle from touching. Surging is likely due to the governor linkage being not responsive because it got stucked. Worth checking what I mean.
