So, since you said you used the flywheel native to the system and NOT native to your replacement engine, it's time to look at a different part of the system now.
I'm not all that well versed on DIS systems since the motors I've built have all had distributors and the DIS systems I have worked on have been plug-and-play deals, not engine swaps.
All I know is that if it were a distributor, you would need to rotate the shaft itself 180 degrees and re-spline it, and then rotate the *housing* to time it.....
How do I make the computer believe the cam has turned 180 deg.
I am suspecting now after spending the night trying to sleep over this, I may have actually made this problem while testing the starter when the cam sensor was not yet connected.
When cranking it will back fire and throw flame out of the intake. systems but look at the cam position sensor and see if it's keyed or anything, to where it could possibly be off spline....since the system is getting the 'Fire' signal at the wrong time. SO I am not sure if i should be using the flywheel from the original or from the replacement. It seem the flywheel is pretty much married to the motor.
I have tested spark and filimed the opening and closing of the intake valve along with the spark from that cylinder. I have tested the TDC of the front cylinders timed with the valves. Some years have a crankshaft sensor but I can't find it on this one. When the intake valve is opening, the piston should be traveling down drawing in the mixture, then the intake valve will close as the piston begins its upstroke compressing the mixture, and *this* is where it should be sparking, a little bit before the piston reaches TDC on the compression stroke. It has a coil pack, Its only fireing the 1 time per cycle. Or should I open the timing chain cover and spin the crank 360. At least that the best guess from all the local guys.
I saw some where on a paper that the dealership gave me about a "TOC learn" procedure. I have a hard time believing that though, I would expect it to store a memory code for No CMP Signal but then be fine after you reconnected it....
The more I try to diagnose this thing without having photographs and being able to physically manipulate it myself, the more diluted and lost this is getting in my head.
It had a minor starter problem with the old engine so I cleaned up the contacts on the starter.
Another mechanic friend of mine had told me to unplug the coil and rotate the crank 360 deg with the ignition on.
And DO NOT continue to crank it like this, you're going to damage the fuel injectors and any sensors in the manifold that the flame licks. I even took a video to see what was happening during the motor turning over. Yeah, I'm used to seeing crank sensors mounted to the front of the motor, behind the balancer and near the oil pan, but on your application, it gets its fire signal from trigger points on the flywheel instead of a ring around the crank nose.