Quite right about the effects of the advance. If your using the old B18 cast iron dist & SU's, you should lower the idle speed to 700 as noted, set at 10-12 deg, then set the idle up to about 800-900 rpm where the engine timing will be somewhere around 16-18 deg if the centrifigual advance is working properly. If there's a vacuum advance on your dist, plug it, then do the above setting.
I always like to take the dist apart and clean the advance mechanism before I set the timing.
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'89 245 sportwagon, destroyed by hit & run driver, RIP. '04 V70 2.5 T Sportwagon, 12k mi and '91 245 5-speed, 209k mi, replaced the '89