Hi mrintenso, there are two standard causes of a petrol engine hunting, or cycling in speed continuously with a cycle duration of perhaps about 2 - 5 seconds. By far the more common one is lean mixture. The less common one is mechanical binding of some part of the governor mechanism - for example a tight spot in a pivot, or a link rubbing against an adjacent part.
Because lean mixture is far more common than a governor fault, I suggest you begin by checking for that. I know you have cleaned the carburetor, but there are other possible causes of leanness. I suggest you proceed as follows. Ensure there is no load on the generator. Start and run the engine, and when it begins to hunt, choke it slightly. Vary the amount of choke you apply and see if you can get it to run smoothly without hunting. If you can, the problem is lean mixture, not a governor fault. If you can't, we can discuss some less convenient possibilities. Please report back in detail, with pictures, on this initial test.
