Here is an update.
Surging - Pulled the hose going to the passenger side valve cover and the idle smoothed right out. Still making the high idle code P0507, but it is smooth and doesn't feel like it is going to stall anymore. How should I correct this problem? The old school solution is a small filter on the valve cover, but it seems like there should be a better solution for this motor.
O2 sensors - Switched the wires, power to the heater wires (the two the same from the sensor) and hopefully the signal wire(black) to the computer and the ground(grey) to ground. Pretty much guessing at this point though. It is still making the code but not as often. And not as much smoke coming out the tail pipe.
will having hooked up the wires the wrong way cook the the sensors? I am hoping the wires are hooked up correct now and the soot is just getting burned off. I need to find a code reader with the feature to read the O2 sensor output. Any good sources?