Your distributor does nothing to adjust timing. Timing is controlled by the ECM and the distributor is used as the cam sensor. I'm going off of memory here, but this is what I remember. When setting the distributor in place you line the mark on the crank up at TDC and set the distributor in with the rotor lined up to the mark on the distributor base. From there I would verify cam sensor angle with a scan tool that it is in specification. You don't use a timing light at all with that setup.

^^^Yes. I would also use scan too to verify angle^^^
See #2 here:
http://marinemechanic.com/merc/distr...fi-nostart.PDF


FYI: there where a ton of bad caps out there, even fromMerc, for these distributors. If you run into amostart, or misfiring, or ect condition 1st place to look at are these caps. I guess it is not uncommon for people to change out once a year or so.

What could be the issue when reading the timing that the lines won't line up and look to be sitting still but rather bouncing within a range of say 12-6*?

If the timing is moving around it's either a sloppy timing chain or you don't have it in base mode. Much more likely it's the base mode jumper has a poor ground.

Agreed with base timing mode, you have to put the scan tool in service mode to put the timing into base timing mode or use the Merc timing tool to do so.

ECM 555 and PCM 555 TIMING is NON adjustable. ECM 555 - the HVS needs to be phased properly to provide the proper spark events to the designated cyc's

I have not read all he posts up here so hopefully my answers here helps out whomever.