Just to report how this went.

From eBay, I got a used distributor (part #0231401003), which is the correct part for my car..

Tonight engine is now 5*ATDC at idle... Idle no vacuum 5*BTDC.

As mentioned early, the car came with a 3.5 distributor and I got a lot of trouble to get it on time... The best I could get was around 8-10*BTDC at idle.

Downgrade to pertronix I (coil & ignitor). Just because pertII is not recommended with solid core spark plug wires. I must say pertII was working ok and I noticed no difference.

Now to fix some more things.
I noticed fuel smell and then confirmed some leaking at the injectors.

__________________
1972 W108 280SE 4.5
1977 W116 450SEL
1981 E12 528i BMW