Is this normal?

Ok, I might have put the cart before the horse,it looks like the felt not shavings.I had to double check the timing before I pulled the distributor, seems to run ok at 20 base and as soon I gave it some gas,it jumped to 50 - 52.I believe it is locked.I will work on it tomorrow .keep you posted. Thanks to all
The felt wad is for lubrication. Put a drop or four of oil on it and it drops oil onto the distributor governor to lubricate it.