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With both valve tappets showing play, it sounds like you're truly at TDC.
A couple questions are going around in my mind though:
1.) Is the reluctor wheel, or whatever triggers the spark, actually triggering at the same moment that the rotor is aligned with the contact in the distributor cap? It kind of sounds as though they aren't in sync and it's trying to spark AFTER the rotor has passed the contact. It seems you've hinted that the relationship between the drive gear and the rotor location can be adjusted, but can the relationship between the spark initiator and the rotor position be adjusted?
2.) Are the spark plug wires installed 1-3-4-2 in a Counterclockwise order?
3.) Have you, in any way, verified that the fuel injectors are actually being triggered? Wet spark plugs?
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Current rides: 2005 Volvo S80 2.5T, 2003 Volvo V70 2.4NA, 1973 Volvo 1800ES (getting ever closer to road worthiness)
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