Well that's not good news. Depending on how much of the old seal went inside you may be looking at pulling the front cover on the engine. Pump has a screen on it but I still don't like junk inside that's not supposed to be there.
My guess is the surging is still carb related. Since you have the engine out you may want to think about pulling the carb and giving it a good cleaning. The Vanguards tend to surge when the slow speed jet gets plugged up a bit. They are set very lean to begin with thanks to EPA and the have a little plastic cap on the needle so that you can't adjust them. I've had a couple that I had to cut the limiter off on the cap so that I could adjust them.
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2264 with 54 GT deck
1641 AKA Black Jack with a 402-E Haban Sickle bar mower
JD317 dump truck
BX2670 with FEL
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