1985 Toyota 4x4, 22RE A340H auto tranny

My timing mark bounces 1-3 degrees when under a timing light. Also, the engine runs better when the timing is retarded- the further the better and has done so since I put the engine in. I swapped the distributor with a known working one today- no change. Before the engine was put in the truck, I verified that that timing marks on the crank and cam lined up and were dead-on, so cam timing isn't an issue (the chain probably hasn't jumped since there really hasn't been any change in this issue since the first start-up). Any ideas on why this would be the case? Bad ECU perhaps?

Also, while under the hood I noticed three things-
1.) There is definitely a sucking noise coming from the plenum area. The manifold was planed before it was installed and the plenum is brand new, surface checked and all. Checked for vacuum leaks with a can of carb cleaner and no change in idle. I do however have a open-element filter- could the increased air volume cause a sucking noise?
2.) The exhaust is unusually wet. There was a splatter pattern on the ground under the tailpipe and it doesn't take long for a hand to get wet while holding it under the pipe. I can't tell if there's any white smoke, if so it's minimal. Could a very small head gasket leak cause my timing to be off as described?
3.) There's a slight backfire at all RPM. Probably related to my timing issue...

Anyway, lots of info, so strange a problem. Any help would be greatly appreciated since I need to sell it before mid-August.