i know you are trying to get answers to an issue, but i would like to suggest your next project be to put a dual res. master cylinder in before you enjoy the extra power too much. Those orig ones are super dangerous. I hope you find the answers you need.
Good luck.
You should send a pm to crackedback, listen and learn. He is very skilled, he will not steer you in wrong direction. I have an old holley 750 in pieces you can have if you pay the shipping, then have it built for what you need.
look up 78 79 police motors, thats all they used was a 318 w/ 360 heads. they also used a special crank shaft ( shot peened). you will want to mill ur heads a bit to make up for the low compression pistons in the 318. good luck
if it was free, run it while you save for a bigger motor. i have seen some amazing 318s as far as power goes. of coarse bigger is better but free is best as far as i am concerned. while you are enjoying the free motor you can then decide what your personal needs are. maybee a stroker?
when you say rotor lined to number 1 plug, this could be wrong? i think it should point to the first intake bolt on drivers side. maybee you need to turn that gear a little to get it straight? good luck