Arcing across coil terminals

It has to be the coil has a hair line crack for sure.

Could well be, but I'll be damned if I'd crammed that coil up close to the distributor like that. How the heck can he grab the vacuum can to make timing adjustments? Why do things to make stuff harder than it already is? That coil needs to be moved for a pile of reasons. Look at the dark traces on the coil wire where it goes into the boot. It's been arcing there. That's carbon trace.

To the OP, have you raised the hood with it running in the dark yet? That's one of those old fart tricks, but it works really well.