Listen to this noise...

The contacts inside the cap are worn because the rotor is hitting them. The rotor has about an 1/8 of an inch of vertical play and about 3-4 degrees axial. From all your comments I believe this to be the problem. Now what would be causing the rotor to have so much play and what would be the remedy? You guys are awesome!

It's normal for the rotor to have rotational travel at rest. Probably on the order of as much as 20* worth, because that is the mechanical advance working. As far as vertical play, that should be a minimum.

I tell you what I did to mine. I bought it in January of 2019. It had sat up since 1980. Once I did a compression test and found everything good, I did a major tuneup including a reman distributor. It just made sense.