360 Timing Mystery

A while back I had a question on here about my timing marks being off and because I couldn't see them very well because my power steering pump was in the wrong position (the original builder used BB brackets and it was high rather than low). I'm tearing everything down now to put on some Eddie heads and cam and the deeper I get the more mystery I find. Keep in mind I haven't been this deep into an engine in 40 years and that was a Ford so try to be tolerant of these questions.

When I started the tear down I stopped the crank at TDC. I know it is TDC because the rotor is pointing to the #1 cycl and the valves are both closed. The first pic is the balancer/dampener and you can see it's about 36* before TDC. Weird, but I know they slip sometimes and I figured the mystery would be solved when I took off the timing cover and found the timing marks all in order. But they aren't. In the second pic you can see they aren't lined up at all. So, I guess when I install the cam and dist. I make everything line up as it should, but can anyone explain how this engine was running...and running good? Started easily, good at higher RPM's and no popping or dieseling.

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