Can't it was an SPI engine. 

Run it at night and see if you see any arcing going on.

Wods...  lets put the old dist. back in and see what happens... ok

           there is such a thing as a bad new part...

   keep us posted.............

Brand new timing light.

if you are using an old fashioned bulb timing light decades old,  it may not be accurate with electronic ignition. Mine was not. It made the mark look like a wide band instead of sharp line, because the  light was too slow and/or stayed on too long). probably made a 5 to 10 degrees difference. Had to get a new inductive timing light

The dist is sending a signal to the coil to spark, over and over, thus the noise comming from the cap is the spark in the cap arching. When this is happening the rotor may or may not be on a button in the cap and when this is the case it will search for the path of least resestance, that being maybe the button before or after the intended button. So this will allow the spark to happen way before top dead center. 

BTW there are times the engine will start just fine.

Timing is set using a timing light while the engine is running.

It sounds as if your timing is off by quite a bit and is causing the wrong cylinder to fire.

Lets break it down a little:

"When I try to start the engine and it will not start on the first spin I hear in the cap the coil discharging very rapidly."

1. Does it discharge apidly only when the starter and hence the disributor shaft are turing, or does it keep sparking rapidly until you switch off the ignition?
2. Where is it discharging to? Is it arcing to the wrong high tension post or somewhere to ground within the dizzy? Try cranking it with the cap off or all the plug wies removed to see if the noise is the same.

"when I am cranking over the engine it seems that it will fire too soon and will stop the starter from turning over the engine."

That sounds like your initial timing is too advanced and your getting ignition well before TDC causing the piston to stop rising.

"Once it is started and running it runs fantactic"

Once the engine is running, it may have enough momentum to overcome the advanced timing, as it normally should.

"and if I disconnect the power from the dist it will crank the engine without any problems."

No coil power no spark = no noises or stalling force.

"Timing is set to 10 degrees"

How was that done?

• Are your timing marks and pulley mark accurate? (Check them against the flywheel marks.) 
• Static timing, with the engine off and an indicator light to tell you when the electronic 'points' begin to open, or 
• Using a timing light with the engine running.
• Did you disconnect the vacuum advance to set the initial timing? Vacuum advance works the most at idle, so having it connected geenerates a false setting.
• If you used a timing light, is it a basic unit or is it an electronic one with advance settings that may not be prest correctly?

Bought one of these //www.minimania.com/part/PSD10/59d-A-Electronic-Distributor-With-Powermax-Red-Rotor-Arm for my 1275 upgrade but I have a few questions.

When I try to start the engine and it will not start on the first spin I hear in the cap the coil discharging very rapidly, if I turn the key off and then back on it will stop. Also when I am cranking over the engine it seems that it will fire too soon and will stop the starter from turning over the engine. Once it is started and running it runs fantactic and if I disconnect the power from the dist it will crank the engine without any problems.

Timing is set to 10 degrees, tried diff starter and checked all battery connections.

Any ideas?