1994 Subaru Justy Backfire

I recently cleaned the engine of oil and coolant with petrol and a rag, so I could see where it is exactly leaking from, turns out it is the head gasket needs changing. To get a better look and to get access for cleaning I removed the filter, top cover,
distributor, crank shaft pulley and timing belt cover. After I was done cleaning and inspecting, I put everything back where it was, started it up and went back home and parked (car was running great)
The next morning it cranked didnt start at all!

So I thought that something was wrong with the dizzy and took it apart and set it just right, changed spark plugs and set the gap. Still nothing! So I grabbed my timing light gun to see if the leads were getting spark, and they were. I pulled out the spark plug and cranked, there was a healthy spark.
Then I thought the distributor lost its timing so I just rotated it (advanced). The engine fired 4 or 6 six times and stalled. I gave it a bit of gas to help keep it running @800rpm so I could adjust the timing to 5 BTDC.
When I put the mark on 5 BTDC (found on crankshaft pulley) with timing light, the engine started pinging hard and often stalled. So I thought lets get the engine to rev as high as possible at idle by rotating the distributor (advance). I started advancing and sure enough the pinging went away and rpms got at 1100, so I backed off the idle back to about 800rpm, I found that the distributor almost couldn t be rotated anymore and my timing light was reading about 60 BTDC on the crank pulley.
I let the engine warm up and tried to put it to 5 BTDC again, the idle dropped to about 600rpm and the pinging was that obvious this time, but when I put my foot on the accelerator, the car backfired straight through the carb! I set the timing back to 60 BTDC and the engine was sounding great and healthy, foot on accelerator and redlined it with no problems at all.
So I thought maybe the timing belt slipped a tooth. I checked the timing belt and it was exactly right (checked with another exact same engine on another Subaru J10 that has no problems). Then I figured to just swap the dizzy with the other J10. The other J10 started right up, so there were no problems with the dizzy. I put the other J10 s dizzy on my car and still everything remained the same.
The crankshaft pulley and dizzy can only go in one way, even the contact breaker camshaft, rotor and cap.
What else could there be. This is very frustrating because I never encountered anything like this, it sound physically impossible. (I am very well mechanically inclined with this engine) Any thoughts. Pls helpT

Thanks