Distributor housing cracked at the forward distributor cap screw hole. Replace distributor.
Dorman makes a "repair kit" for that screw hole, but given the Vortec distributor's reputation for failed gears and failed bushings...you probably should just replace the thing.
IF (big IF) the distributor gear is worn, or the timing chain is loose, that could account for the inability to get the thing turned to proper "offset".
Reinstall new distributor just as the service manual indicates. If you still can't get the cam offset correct, some aftermarket distributors seem to need the distributor gear removed, turned 180 degrees, and reinstalled.
