I'd vote that the distributor tang is still not engaging the oil pump correctly. I assume you see the rotor rotating?
My 235 has a metal collar for bolting the distributor to the block. if it's tightened too far down the distributor shaft, the tang won't reach the oil pump.
If yours is like this, loosen the collar before installing the distributor - move the rotor until it 'clicks' into the slot, THEN tighten the collar.
Assuming of course the 216 is like the 235 in this respect!
