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Hi, there been reading your posts and I have a theory that you are running in limp mode.
I may be all wet on this (a very good reality) but I will give you my thought anyway.
The timing point is not moving because the fuel map computer may not be receiving and processing a RPM or Oxygen sensor signal. In default mode, timing will not move and the car will run crappy.
The order of signal processing to turn on the ignition module and yet run the fuel spark/program is not in my expertise, at all. My first thinking was a harness or inside computer.
The retard mode is staying at zero while turning the distributor is puzzling except on CPS cars. I do not know if the 89’s have one. On those CPS cars, the distributor just distributes above basic timing, I think, you could say, it is all the same! It ONLY matters, WHEN you lose the CPS!
When the timing is to far ahead (more advanced) of (TDC) and is now BTDC), the knocking or pre ignition occurs to begin. Retarded becomes After TDC, as you stated, it is holding TDC until the engine speeds up without adjustment.
When in limp mode the fuel mixture goes rich to help prevent knocking. A slower not self-igniting burning mixture. The knocking can be from carbon build up on the piston tops and on the dome of the combustion chamber. A higher compression ratio becomes present.
Question is how long has it been running rich and why? Could it be a 02 sensor or the infamous fuel pressure regulator?
Knock sensors are very simple devices and I have not seen one fail. Disclaimer: I see only my cars.
I have tried the hammer thing and in my opinion, the computer is to fast in correcting things to see it move, at least, while I try to put the hammer to the metal down there. I wrote that off as a BOGUS method or I am way to slow!
I do know on my cars, I have to snap the throttle open, to see the timing jump a little farther because there is not much of a load present.
If I use my old fancy timing light with the adjusting wheel, I will see how much more in degrees more accurately. I seldom need it any more since the early eighties. Besides, you cannot adjust the amount of advance if it they were incorrect. They took that away with the vacuum diaphragm adjustment on earlier modules.
That was my thought. Hope it helps you and not confuse you into looking somewhere closer to the problem.
Phil
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