Possibly the rotor is not on all the way and not sitting level?  I don't suspect the Petronix, more likely to be the cap or rotor..have you tired another rotor? 

I tried a new cap but had the same results.  The distributor itself was purchased new 6 months ago so there is no slop in the shaft or bushings.  I checked for rusted springs and weights but they move freely without issue.  That cap I installed was burned within 1500 miles of driving.

Take the base plate out and look at the springs and weights sometimes they rust causing them to stick. Check for wear in the shaft bushings (sideways).

That photo indicates the cap is not centred and level (fully seated) on the distributor. The upper two terminals show bad arcing but no physical contact scoring with the metal. The other two look "normal" except for a faint ghostly shadow similar to the burn areas. The upper gouge out of the retaining clip area does look like something is hitting. (It is too early in the day for me to figure out which way is advance and retard...) But the 'reset' of your advance from 35 back to 25 suggests it hit the cap.

Maybe the wrong cap for the Pertronix to fit under? Or something inside not positioned right? I'm still eyeing the cap position with suspicion. Try another cap (even an old one) and see if it sits better and clears the advance. Make sure the cap registration key is in the right position and nothing (a wire etc.) is getting pinched between the cap and body. 

All,

I have been having some poor running issues with my 1380 engine as well as running warm.  Everything is fairly new in the cooling area and ignition system as well.  I decided to check the timing and found this issue under my cap.  Also, it appears that the pertronix unit I have installed may be chaffing on the inside rib of the cap when vacuum advance is pulled.  Additionally, I checked the timing at 3500 rpm and it was 25 BTDC, well below what it should be.  I advanced the distributor back to 30 BTDC, tightened it up, went for a ride, and checked it when I got back and it was 35 BTDC.  I readjusted, went for a ride, and then it was sitting at 25 BTDC.  At this point im thinking it is the pertronix unit that is faulty and am going to convert back to points.  I am confused with this crazy issue so any insight or experience with the same issue is greatly appreciated!

Thanks,
John Mitchell