ANSWERS: 2
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If you advance the timing and the h.p. increases, but the lifters ping, it's too far advanced. If you lower the timing power will always decrease. If I knew what else you've done to the truck(302) it would help. But, make sure it's NOT in 4x4 when you tune it by driving. 4x4 needs torque, not h.p. Here's an easy test- advance the timing until it pings then, make sure you are running 94 octane fuel or add a can of 104+ and the engine is COLD. COLD FUEL has a higher burn ratio. Now, NOT in 4x4, take it out for a good run(through all gears, then full out in 4th) Do this on a safe legal road. Hope this helps.
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Make sure you disconnect the spout connector before you set timing. if you don't you won't get it set accurately. 1986 was the first year for fuel injection on the pickups. and the spout connector should be right in front of the distributor wrapped in electrical tape if it has never been pulled out before. If this doesn't help check to see how much play you have in your timing chain. to do this pull you dist. cap and put a breaker bar on your Harmonic balancer and rock it back and forth you should have limited slack there. If you have alot pull the dist and check to see if the gear on the end of the dist. is knife edged. If not then you will probably have to change the timing chain and gears.
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