As Thomas noted, the surge brake is that large mechanism right behind the ball hitch on the trailer tongue. The clunking sound when slowing and stopping is caused by the surge piston moving back and forth. This can be disconnected by lifting the metal flap that sits over the piston. It is really hard to move, so you will need to pry it up with a pry bar or something similar. It will suddenly snap up toward the ball hitch, so be careful and prepared. I use a long metal rod with a flattened end to get it up in disconnect mode. You may also have to pry the moving mechanism around the large side springs, too. Such fun! When disconnected (or opened), this stops the piston from moving and eliminates the clunking back and forth. However, many states will ticket you for running with the
brakes disabled. We've never been stopped, but it can happen.
The brake controller you have in your tow vehicle is only for electric
brakes, so it can't be used with this system. Surge
brakes are commonly used on boat trailers, so a marine/boat place that does trailers could probably help you. By the way, my wife is CindyL, also known as Debbie Downer (by her own words above). She wants electric brakes so I don't have to mess with these hydraulic brakes any longer!