I did some more investigating and found the distributors are different. The internal coil HEI is .120" longer (from the mounting surface to the center of the gear) then the other HEI or my old points unit. This then put the lower bushing right in the oil flow from the gears meshing which act like a small oil pump. The gear and shim washers are worn at the top instead of the center, and the gear was digging into the block right above the oil pump. The seal and bushing are most likely worn as well in the HEI.
I am rebuilding the new style HEI so I can replace the bad unit. It came out of this engine so it should take care of the problem. At least I don't have to replace or remove the engine. Its a very tight fit in a '37 Chevrolet truck.
Thanks for the help, Joe
