1968 4000 3cyl gas governor problems

My dad and I have owned our 1968 Ford 4000 gas burner since the early 80s. We rebuilt the motor over Christmas because of significant blow-by (one cyl was only at 60psi compression). Anyway after the rebuild, we've been having trouble with the governor. It's adjusted per the book (set at wide open and adjust throttle lever), but the RPMs will take off if you set the throttle low and bog the motor down. At high throttle the problem isn't as bad, but it still will over-rev the throttle setting. It seems as if the 2 arms on the governor are not following each other very well. They separate pretty far at low RPM, and then when the governor catches it, it's swinging pretty fast before it hits the other arm. See picture at the end.
The problem is especially bad when you put the trans in reverse. I'll let the clutch out and the motor pulls down a little, and then it will rev to 2200 and then fall back down. It's very annoying.
Me and a friend replaced the governor spring last night and that didn't help it at all. We then decided to take the cover off to see if there was anything wrong with the balls. All balls are fairly tight in the cage-- no slop. I'll also mention the carb is a Holley, and it's been rebuilt about 5 years ago. I don't suspect it's the culprit, but I'm not ruling it out. We didn't mess with it at all during the engine rebuild.

Here's a pic from us rebuilding the motor:


Here's some pics from last night taking it apart:










Thanks for the help. The problem is really giving us fits.
-RC

I don't know what to suggest.
Are the holes where the levers pivot in the housing worn?
How about the shaft on the cup in picture 4.
Does it slide in and out freely? Maybe have a piece of crud or a burr on it to prevent it from sliding in and out? Could it have gotten dropped or bent somehow so the shaft and cup are no longer concentric to one another?
It seems to me if that shaft is sticking and not moving in and out like it should it could cause the symptoms you describe.

Good points. I looked into it, and the cup slides fine, but that small arm (the one that connects to the carb and has the spring on it) is binding. You can kind of see it in the in the last picture. I'm kicking myself for not catching it. I'm replacing the pin and the bushing. I bet that's the problem.
Thanks a lot for the help.
-RC