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I had (and still have) the same problem with my 88 240. Took several tries to pass smog because the timing would shift (see my post entitled Ignition Timing -Phantom Shifting). Aparently what my mechanic and I eventually found out, through massive research efforts, is that the plugs for the TPS and IAC are roughly the same form factor and were accidentally switches, sending +12V where the ground should have been. This caused a specific circuit in the ECU to short out, sending faulty information to the ignition computer which in turn would either advance or retard the spark as it damn well pleased.
The resolution was simple once I managed to pass smog - My timing was fluctuating between 12 BTDC and 18 BTDC... I wanted it more toward the 12 side of things so I retarded the timing a bit so now it runs between 9 BTDC and 15 BTDC... and runs perfectly. Give it a shot, what do you have to lose?!
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-Flup, 240DL Wagon, 2 subs in the trunk, Dancing Bears Sticker to top it off :)
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