Mercury 2 Stroke Misfiring?

[dirtchickn]

My 1998 Mercury 2 Stroke 8hp was surging while running above 50%. I assume it to be a fuel problem. I am replacing the fuel hose from the tank to the engine, have cleaned the fuel filter under the cowl, changed the fuel lines under the cowl, and used some spray carb cleaner. I think the surging has gone away, but now it seems to be misfiring (or backfiring) ? I took out the plugs and they have oil on them, but not so much as to seem really unusual. I sanded them off a bit, and things got better, but not yet normal. Am I missing something?

OH, by the way, I have a brownish sludge with some black coming out of the exhaust port on the top of the lower unit. Not sure if this is "normal".

Any thoughts?

Thanks in advance.

Rich
26 Columbia MKII