MSD multi-strike boxes don't like electronic dial-back lites. Rev it up to see where the timing peaks at, then set the timing to 35* +/- 1, at or above that rpm,and let the idle timing fall where it may.
If your dizzy has a vacuum advance can on it, be sure to hook it up, when done.
I would do the timing stuff first, cuz it's cheap and easy, and will show results right away
Before you pull the tranny, make absolutely sure the fluid level is up, cuz from the description, it really sounds like the pump is sucking air. Level ground, hot,neutral,correct dipstick,correct dipstick anchor location.
By the description, it's hard to imagine a clutch or band issue. Fluid level,a pump,or the VB,those I could see.
The reason to swap out the TC, while the tranny is out, is so that you can rule out both together. If the surge is gone with the swapped-in parts,then you may want to swap the TC back in to prove it's Ok. Or not.