just rebuilt runs bad

Just got 340 engine back from the machine shop with pretty much a full overhaul. Set up includes mild Comp cam, KB 10:1 pistons, new RHS heads, Edelbrock RPM air gap manifold w/1806 thunder series carb (650cfm). Installed the motor in 71 Duster and configured MSD 6AL, MSD 8203 blaster coil, MSD 8534 distributor. We set initial timing by findingTDC on the compression stroke, rotor lined to number one plug, then distributor turned about a quarter inch counter clockwise to add 12-15 degrees advance. Starting with number one, wired plugs 1,8,4,3,6,5,7,2. Problem is, when started, the engine backfires through the carb and we hear tapping noises. Verified TDC on compression stroke and correct firing order several times. The machine shop believes TDC is right but thinks the issue has something to do with the ignition system. Timing light connected to #1 indicates 12 BTDC, twisting distributor a little either way doesn't help.

Any thoughts on why this engine would be backfiring through the carb and tapping?