That black box is the ignition computer. On that engine the distributor contains only a sensor that gives a digital pulse to the Chrysler made ignition computer to tell it of the position of the crankshaft. The computer calculates speed and uses the manifold vac hose as a load signal and computes when to cease to charge coil and create a spark. On 83-88 there is a knock sensor that is located under the intake on block between the #2 and #3 cylinders that tells the ign computer when its computations are yielding an ignition setting that causes spark knock. It retards the timing on all cylinders in 2 degree increments (3 steps, total 6 deg retard) until knock stops and then re-advances back to normal. I would check that knock sensor is working. (I assume that timing is set to correct specs) On that system you can do this by setting engine speed to a fast idle of around 2000 rpm by adjusting throttle cable to hold throttle open slightly. Then attach timing light and note timing setting on scale on t belt cover adjacent to crank pulley. Now tap on exhaust manifold (tap sharply like you re driving carpet tacks, not 16 penny nails) and you should see timing marks move to left as you tap and move back to right when you cease to tap. If not the knock sensor or its wiring is at fault. The knock sensor on that version looks like an oil pressure switch.

This test is not valid for any other knock sensor volvo engine as they have cylinder-specific knock detection and the knock has to occur in a time frame relative to a given cyl and then only that cyl has its timing modified.