1987 Chevy 350 noise at high RPM, timing related

I have a completely stock 1987 Chevy 350 (marine). Compression 150-180psi all cylinders. Recently replaced heads after discovered water in the oil, low compression in cylinder #5. Found leak in head gasket between water jacket & cylinder #3. Found crack in head on #5.

The timing is controlled by an electronic Thunderbolt IV. Stock timing is 8* BTDC (at idle).  Max Thunderbolt IV advance is 22*.  So with stock timing at WOT, the total advance is 30*.

With the stock timing and 87 octane, the engine starts to make noise (call it a knock, ping, whatever) around 3000rpm (under load) up to WOT. As the timing is retarded, it doesn't make noise until higher and higher rpms. (for example, 6* BTDC 3200 rpm, 4* BTDC 3400 rpm, etc. [made-up #s])

In order to make the noise go away at WOT, I have to set the timing (at idle) to 4* ATDC. At this point, the engine runs ok (no noises, starts good, runs good) but only revs 4000rpm when it previously rev'd 4600rpm in this boat. I believe the drag is roughly the same (clean bottom of boat, no major changes).

Previously blamed this on bad timing marks, but this weekend verified that the timing marks are pretty darn close. Stuck pushrod in #1 at different crank positions. Goes in the least distance near 0*, and approx. the same distance at 16* BTDC and 16* ATDC. It might be off a few *, but not 12*.  

Do the new heads have smaller combustion chambers. This will raise compression to an unacceptable level with 87 octane fuel. 180 psi. sounds a little on the high side and quite a difference from 150 psi. Are both new heads the same casting #?  

What is your question?  

What's the condition of the advance weights and springs in the distributor?  

Thanks for the ideas.

The new heads have the same casting #, which is the same casting # as the old heads.  I believe all cylinders were 165-180 except #5 which was 150.  #5 cylinder did see some water due to the blown head gasket.

There is no mechanical advance in the distributor.  The advance is handled by the Thunderbolt IV ignition system.  

Have you looked at the color of the plugs? Thunderbolt ign. used a preset adv. module that can be swapped for different amounts of total adv. For example, the 502 in my boat uses 10 deg. initial adv. and my module is 24 deg. for a total of 34 deg. What module do you have? Are all your connections to the Thunderbolt tight and grounded? Now you said that you have to back the timing off for it not to knock. Are you reading your total timing with an adjustable gun?  

I would swap to a automotive ignition.  
Jim
70 El Camino
461 solid, m20,
pics in readers rides

The plugs always look good...I've never killed it when it's making noise and checked the plugs though.

The max advance from the Thunderbolt IV ignition is 22* which occurs above 4400rpm.  The entire advance curve is on page 14 http://www.boatfix.com/merc/Techbk/95/95HGB4.PDF  Will double-check the connections, but yes I'm 95% sure they're tight.

I haven't attempted to check the timing above idle.

It doesn't sound like spark knock to me..more like a mechanical tick or clicking sound.  But it goes away when I retard the timing 12*.  Hard to explain any other way.  

It would be nice to get an adjustable gun on there and see some real life figures.