I recently replaced Cruise control module on a 1981 911 it now works but when you set speed it will continuously surge to maintain set speed. Could it be the servo unit or some other vacuum area?

 

Could be both, but it does sound like a vacuum problem. Either you have a vacuum leak at the servos source, or else the servo itself has a hole in the diaphram. Check for cracked vacuum hoses. If you have a vacuum test gun hook it up to the servo and see if it holds vacuum, if you don't have a test gun, use a long enough piece of vacuum tubing and plug it on the servo and "suck"while you are sucking on it put your tongue over the end of the tube and see if it stays stuck to your tongue if it does not stay stuck you might have a pin hole in the diaphram. I have seen some servos that will not hold vacuum unless they are energized.