It’s good that you are servicing that engine, thoroughly cleaning and degreasing and fixing oil leaks. It will run cooler and hopefully last a very long time. Adjust the valves when you reassemble and consider resealing the intake manifold (seal inside the two halves) before you reinstall it. Over time the manifolds develop leaks and will let unfiltered air enter the engine after the carburetor, causing an improper air/fuel mix, poor idle and overall poor performance.
Keep all the tins in place and purchase a sealing gasket to seal around the oil filter if yours is missing or loose fitting. These steps are important to keep the engine cool.
Your flyball spacer looks OK for now but that composite material splits and allows the spacer to slip on the shaft. This causes the engine governor to work erratically and causes the engine speed to surge. You’ve done the major work removing the engine from the tractor and taking it apart. I suggest while it is apart you replace that flyball spacer with a metal one that won’t split.
I also suggest you replace the ignition module, the insulator behind it and the trigger module while the engine is dis-assembled. They fail over time and are simple to replace while the flywheel is already off.
Search this site for failed flyball governor photos and ignition module replacement for tips to follow for successful repairs.