And that’s why you don’t lock out a distributor. For one all engines need a curve, however short it may be. And two, ALL ignition boxes retard like that. If you don’t test for it you have no idea how much timing you really have.
6 or more degrees of retard is not uncommon. I think I would lock timing out at 38 for now and start working with the rest of the tune up. IIRC, the plugs looked fat. That can some of the popping you are hearing.