This forklift has a brand new Isuzu 4LE2 diesel engine. We installed it a few weeks ago, without issue. The new engine came with all new injectors, pump, governor (sealed), glow plugs.... All filters were replaced at the time of engine install.
From the first start up, post-install, the idle surges from about 500 to 700 rpm. It smells like it's running rich, however, there is little smoke. What smoke I've seen is white in color. The injection pump is not adjustable. I've checked the glow plug and pre-heat system, finding no issues. I installed an oil pan heater and an inline coolant heater to help with the cold weather (10-30 degrees). We drained the fuel and filled the tank with clean diesel, along with a treatment to clean the system and remove any moisture. None of this helped.

After a 10 minute warm up (surging the entire time), if you give it any amount of throttle, it runs smooth from idle to around 2300 rpm (operating speed). If you QUICKLY let your foot off the gas pedal, the rpms drop to around 500 and the surging starts. But if you have the gas pedal depressed, running 2300 rpms, then SLOWLY bring you foot up, allowing the throttle to return to idle in a slow, controlled manner, the idle stays smooth (around 500 rpms).

The engine was bought new, as a complete power unit. I do not have a warranty on the new engine.

It sure seems to me like there is an issue with the governor, but I'm not sure.. Any thoughts or assistance would be appreciated.

Thank you!