I wanted to follow up on this thread because I just got through troubleshooting a radio with a similar problem. In this radio, the problem was TR17. One of the pins of the transistor was shorted out to another pad for some reason. After I fixed that, I had modulation. What I did to find the general location of the problem was turn the radio so the solder side was up, then key the radio and use a wet finger to slide around the radio starting from the audio chip and working toward the final. On the scope you can see that this causes modulation. When I got around TF17, it stopped causing any spikes in the output, so I knew it was around there.
One thing that's interesting is that now on the air reports tell me that after a while the radio starts cutting out. Watching the meter, it seems that when it starts to get hot, the radio is cutting the power back. I guess I'll need to check the final and driver now, or perhaps TR17 is bad all together. Anyway, at least I have modulation and full power most of the time. Now it's on to troubleshooting the next problem.