If your distributor is new, it sounds like you are massively out of adjustment.
The fact that your system pressure drops to zero is also a problem DEPENDING where you are measuring it at. This problem is NOT the one keeping you from starting.
First you should check to see if the piston doesn't bind as you push down on the airvalve with the engine off, but the fuel pump running (remove relay and jump circuit for testing).
While doing this you will be pouring fuel out of the injectors so do it quickly. Next you should set the base setting for new installation of fuel distributor. To do this remove a few injection lines from the distributor (maybe all of them - to get a better view). Next by-pass momentarily the fuel pump. If fuel comes from the distributor, turn the adjusting screw counterclockwise until fuel no longer comes from the output ports. Then turn clockwise until fuel starts rising again (use a cloth to absorb the fuel so that you can see it raise in the threaded port). Now again turn the adjuster counter clockwise till the fuel just stops flowing.
Now press down the airflap and view the flow. It should start and stop with plate movement. The flow should be visably similar. Reattach the injector lines, clean the plugs and try again to start. I tend to like to error on the lean side of the basic set-up as the engine is full of fuel. Also one can easily add fuel during testing by resting ones finger on the airflap. Its harder to remove fuel (but it can be done by lifting the airflap with a needle nose pliers)
AND BE CAREFUL, you are likely to have fuel all over the place, a random spark will make it a torch*******************
Bosch Master, ASE Master, L1
33 years MB technician