Discovered that the distributor on my 235 is from a 48-50 engine (most likely a 216). All of the tune up parts I installed were for a 61 235 engine (confirmed year of engine by block cast number). Not really sure if there is any big difference but did order new points, cap, rotor and condenser for the distributor (not the engine). Will see if there is any differences that would explain why the rotor doesn't line up with the #1 cap contact when the #1 cylinder is at TDC. Maybe the locating tab on the distributor cap is different on the earlier year distributor. Worth a shot.
Thanks again,
Ron