Sounds like your timing is dialed in correctly. Generally, advancing it will give you more low end power and better fuel economy.
One thing I would suggest, is to take off your distributor cap, and make sure the weights move freely. Its common for them to get "sticky" because they are corroding. I had this happen and my car felt more and more sluggish. I took off the weights, wire wheeled them, polished with 400 and then 800 sand paper. Cleaned/wiped off with WD40, and put the tiniest amount of general purpsose lithium grease I could on there. Like you take a tiny dab on the tip of your finger, and just spread it on the weights. Your finger should just glide across the weight, and then get stuck because you ran out of grease, and the take anothe tiny dab and go again. VERY VERY Little grease! Enough to keep it slippery, but not so much that it will spray around on the distributor.
The power came back, because the advance was operating correctly.
To check timing, just point the gun at the timing mark, and read what youre getting. If your harmonic balancer doesnt have timing marks all around the distributor, you will need to mark the balancer or have a dial back timing light.
1) DISCONNECT THE VACUUM ADVANCE!, and plug it on the carb.
2) Check TOTAL ----> Rev the engine to 3000rpm++. I generally go to 4000 or 5000, so I know 100% I am past the total curve. And read the output. Should be around 34ish degrees, depending on what your engine likes.
3) Check Initial -----> Just point the timing light at idle and check. Becareful, if your engine idles high, it may already be into the mechanical advance. Factory told you to check it at a certain RPM. Usually 750rpm or so.
4) Mechanical -----> Difference between Total and Initial. Was about 12-14* on a stock distributor. If you know the PN of the distributor, MSD should be able to tell you.
5) Vacuum, I usually rev the engine up to get close to total timing, and also high vacuum, note the timing (lets say 34*), then plug in the vacuum hose, and see how it changes (lets say 42*). Then you know your vacuum advance is 8*. You can get an adjustable canister as well. When you check the timing with no vacuum, make sure to pinch or plug the hose some how so you dont have a vac leak.
Vacuum advance is necessary if you care about MPG. Most guys usually leave it out, because its kind of an erratic system.
