why is lovelace running against an incumbent republican?
Lovelace is your classic maverick outsider. He'd probably be running regardless of the conditions this year, but there are a number of factors that make it possible for him to beat Sanford.
1. Sanford can't point to any accomplishment of his own over during the term. His signature eforts have all gotten blocked by the Assembly, which is solidly GOP, so he can't blame the other party for obstructimg what he would have done.
2. Sanford's PR stunts and attempts to blidgeon rather than cajole the Assembly into doing what he wants have caused to lose the support of many insiders. His support there is mostly from people he hasn't ruffled the feathers of and are supporting him because he's the incumbent governor, not because of any enthusiasm for him.
3. The primary race between Lt. Gov. Andre Bauer and Mike Campbell (son of former Gov. Carroll Campbell) is likely to determine who wins the Lieutenant Governorship, as it does not appear that the Democrats will be fielding a credible candidate in that race. Bauer is even more of a problem candidate than Sanford. With South Carolina's open primary, that is likely to entice many independents and some Democrats to vote in the Republican primary this June, and by and large I expect those people will not be voting for Sanford. I am among those voters. If it weren't for the Lt. Governor's race, I wouldn't yet have decided which primary to vote in. While I am disappointed in Sanford, I despise Bauer.
4. Our local economy has not yet come out of the recession. Our unemployment rate has been above 6% during Sanford's entire term as governor and he hasn't even been able to point to a single major anouncement of future jobs, tho he sure does his best to trumpet every minor announcement that comes along. The major improvement in the unemployemt rate between Deccember and January that Sanford has been pointing to for cover had everything to do with the BLS' seasonal adjustments. Seasonally adjusted the rate went from 7.2% to 6.2%, looking at the raw numbers, it went from 6.8% to 6.7%. That's the sort of result a politican might like, but it isn't going to affect the voters mood much.
Sanford does have two significant advantages. He's the incumbent and he is sitting on a pile of cash that he can spend. That's about it, but it's enough to make him the favorite. His problems are largely ones of people being disappointed that he hasn't lived up to their expectations, rather than things he has done to make them actively angry, so while his support is much softer than any incumbent would like, his antipathy is also soft.