Reasoning: (1) Hmmm. Smells like gasoline coming through the exhaust, huh? That means there's incomplete combustion from one or more of the cylinders. (2) I dismantled the Craftsman timing light but didn't see anything obviously wrong. Perhaps, we should try it on another engine. So I tried it on my wife's 940 wagon. The timing light works!
the timing light works on my wife's 940 and her car is running
fine, perhaps it's the #1 spark plug wire in my 740 that's at
fault. Remember, the inductive pickup of the timing light connects
over the #1 spark plug wire. I took that wire (Bougicord) off
my 740 and ran a resistance test on it. No reading at all, even
on the 20 Mohm scale! I then decided to test all of the spark
plug wires. Only the #4 spark plug wire had a reading, and that
was 1.8 kohm. Then, I put all the wires back on the engine and
used the timing light on each spark plug wire. The tests confirmed
the results of the resistance tests; I got light only from the
#4 spark plug wire. I replaced all of the spark plug wires and
the coil wire with Bosch copper core wires with metal spark plug
endcaps. I redid the timing light test and found that the ignition
timing was 5 degrees after TDC. On the EZ 117K system, the ignition
timing can be changed mechanically by rotating the distributor.
I loosened the two 10-mm hold-down bolts and rotated the distributor
~15 degrees CCW. Retesting, the ignition timing is at 10 degrees
BTDC, which is correct. The car runs smoothly now, has oomph going
up hills, and does not hiccup.