Looks like it to me.

Attachment 479097
Not all billet cores are 2 piece. This a matched pair from Marine Kinetics.
The distributor is to high, the contact pattern is not correct.
If the gear is the correct one, you have another problem, I have seen excessive gear wear, due to high oil pump pressures.
If you have excessive cam end play, you will have wide wear tracking on cam lobes and signs that roller is walking back and forth in lifter body. What is the end play on cam shaft, if you have a stepped nose cam all should be good, if not cover flex or improper set-up.

MER, it is a stepped nose cam (stock GM/Merc core), so timing cover flex should not be an issue. I did not install the cam so I can't say what the end play is on the Camshaft. I agree that the pattern seems a bit low on the gear, but how do you adjust for that? Longer distributor shaft would be the only way I could see correcting that.

Block was decked to square things up, and heads were milled, but don't have sheet in front of me to recall how much. Either way, those operations would have the wear pattern going high on the distributor gear, I would think.

Oil pump is a Melling 10778.

Do You have Your old gear ? Ck the gears together to make sure its the right gear.

Are you referring to the old distributor gear? They look pretty similar. As I understand it, it is difficult to tell if a gear is melonized just by looking at it. Can someone tell me how to verify? :confused:

Engine builder is suggesting that I go with Comp Cams' composite distributor gear. He says he has had good luck with those for all types of cams. Can anyone tell me whether Merc is using the .491 diameter shaft or the .500 shaft in their distributors? Anyone had any experience with these gears?

If the oil pressure is normal, it would have to be the gear.
2 ways of getting gear located, one is a MSD distributor set-up tool and its also a priming tool. You could use gear contact pattern paste, machinist dye. I have the tool of course. To lower the distributor, you can measure how much to lower, then take the distributor apart then put in a lathe and machine the flange down. If thats not enough, I have welded up the void on the housing then machined it and installed a slip collar to adjust the height. Its alot of work if you have to take it to someone.

Sorry, I was looking at the picture. I see its a Gen VI with look plate.

Can you get a picture of cam in block, to see gear or lifter roller pattern on lobe? I'll be back later, work to do!

Yeah, it makes sense that machining some material off the flange on the housing would allow the distributor to set down in the hole a bit lower. Would the oil pump shaft also need to be machined down?

If I recall correctly, oil pressure was about 60 - 70 PSI at idle when cold, then drops to around 40 - 50 when oil warms up to 185*.