Head-scratcher Ignition problem on 4.3L... Help please?

Starting to think you might have bigger issues - have you done a compression test?
Yes.. I did the compression test yesterday. Results were good. {1:155, 2:153, 3:146, 4:152, 5:147, 6:155}
 
I do not understand how you performed a "top end rebuild" without changing the head gaskets! I really don't understand that you did a top end rebuild without removing valve covers. What do you consider a "top end rebuild?"

My "top end rebuild" involved removing the distributor, carb, and intake manifold, exhaust manifolds & risers, rebuilding the carb, and then reinstalling and sealing all of the above. Did not pull the valve covers or heads. Sorry for the confusion. All of that work was successful in fixing the issue of water getting in the oil. Oil looks pristine now and compression is good.. so I was hopeful that I had fixed the main issue.

I'm willing to redo the head gaskets and that seems like the next logical step. I've been very focussed on ignition given the missing pulses seen on the timing light, but I suppose that could be misleading? My question now is.. would a stuck valve, bad head gasket, or slipped chain cause missing spark pulses?
 
Okay. "Top end" usually refers to the cylinder heads and it's components, which is why I was confused.

It could be either valve timing or the valve train and there's little that you can diagnose from outside. You might see a problem with the valve train by pulling the covers and cranking the engine. Or you might diagnose a timing chain problem by using the procedure that I assume is in the service manual. I looked in the old Mercruiser manuals that I have at home and don't see a procedure to check the valve timing without removing the front cover.

I am not convinced that the timing light is showing an accurate picture of misfires. I have seen missed flashes on engines that are running perfectly well and exhibiting no signs of misfireing. On the other hand, you say that the engine's performance is degrading with the increasing occurrences of missed flashes. There just isn't that much else in that ignition system that you have not changed.

If I remember correctly, that Thunderbolt system uses an optical sensor instead of the more common coil and reluctor, or magnet and Hall effect transistor. Are you sure that is is very clean under the distributor cap? If the lenses on the optical sensor are getting dirty because of a problem in the distributor, that would cause misfiring. Of course, old fashioned contamination of the distributor cap can also cause problems. And then there's the problem of loose dirty connections and grounds. I've seen intermittent issues in wiring harnesses do crazy thing to the point of the factory telling a tech pulling an engine apart only to find a bad harness.
 
I agree.. my obsession with the missed flashes on the timing light may be misdirected.

An interesting point is that after the hydrolock and after my "rebuild", there have been times when it ran quite well... both at idle and up to about 1800 RPM. (at first it only had problems starting at around 2000 RPM). So if there was something seriously wrong like a bad valve or timing chain issue, I'm not sure that it would have been able to run smoothly at all... or is this possible?

Here is a video taken immediately after the carb rebuild.. it got to 3000 RPM before backfiring. Do you think it's possible it could run this smooth if it had a valve or timing issue?

I think it would make sense to remove the valve covers and inspect them, and hand crank the engine to make sure all of them are moving properly. I will also try replacing the ignition module wiring harness with a custom one (I now have the right connectors) and see if that helps.
 
I’m about out of ideas at this point. But one last thing - is the timing advancing correctly - the Thunderbolt V ignitions have a base timeing mode, could it be left on? This would prevent the timing advance or spark knock sensor from working.
 
Thanks.. I'm about out of ideas as well. :( It's Thunderbolt IV, not V, so there is no base timing wire or knock sensor. Using a timing light, I was able to see the timing advance as I rev it up, so I don't think that is the issue.
 
Quick update: I created a custom wiring harness for the ignition module and tried that. No difference - not really a surprise but at least the wiring is completely ruled out.

At this point I think the most likely thing is that the timing chain has slipped/jumped or else I have one or more bad valve(s). In either case, I think I'm over my head. :( I'm going to get a mobile mechanic to come take a look.. if he cant fix it for under $500 I'm just going to get a new engine. I'm just at the point of frustration saturation...

Thanks for the help everyone. If anyone has any brilliant thoughts feel free to share but I dont think there is anything else that could be diagnosed online. I'll post back with info regardless of what happens.
 

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