If you have changed the brushes and seated them as best as your mounts will allow, you need to look very closely at the commutator. There are three main possibilities:
(1) Damage to the surface of the commutator. Check for pitting and/or mechanical wear.
(2) The commutator is "out of round". What I mean by this is that if you were to mount your generator shaft on a lathe, you could determine that the commutator is not exactly rounded any more, but has worn in a slightly (or sometimes not so slightly) elliptical pattern. When this happens the distances can exceed the tolerances of the mounts and springs enough to cause arcing.
(3) A combination of (1) and (2).
Unless the surface damage to the commutator is extremely slight, or extremely severe, the best solution is to turn the commutator on a lathe. This will remove most surface irregularities and pitting, and will bring the commutator back into "true". This will ensure that the brushes are making consistant, constant contact throughout the rotation. All this assumes that the commutator is of a design that CAN be turned: not all are. If not, the shaft assembly will have to be reworked or replaced.
Hope this helps!