If I'm understanding you correctly, you can turn the rotor with the distributor installed in the engine...no? That should not be the case. There is a notch that locates the rotor onto the distributor and a mating tab inside the rotor's hole. Make sure that the rotor doesn't turn relative to the shaft. If that is ok then pull the dist out of the engine. Hold the drive gear with a suitable pair of pliers or channel locks and try to turn the rotor holding the gear still. If the rotor will turn then that is a problem. Remove the rotor and with a second pair of pliers try to turn the upper part of the shaft against the lower, if there is significant movement then replace the dist. If everything looks ok then you may have a problem with the drive gear in the engine block. The 2.3s do tend to wear out timing components. If you can rule out the distributor then I'd install it back in the car. Have a buddy hold the rotor with light to moderate pressure while you turn the engine by hand. If the rotor doesn't consistently move with the engine then there is a problem with the drive gear, most likely the sprocket that is driven by the timing chain is worn out to the point that the timing chain slips over it instead of turning it. Asuming that is what you find, you'll have to redo the timing components in the front of the engine. That is a bear of a job with the cylinder head still on the engine. Worry about that though once the diagnosis is made.