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1. Does L-Jetronic have knock sensing and spark retard capability?
No.
The ECU can alter the timing independent of the physical distributor?
Yes, (also in combination with the flywheel sensor and vac sensor), which is part of the reason you'll find the blade on the dizzy rotor seems so much wider than those found in mechanically advanced types.
Moving the dizzy body can really throw things out of whack as you may inadvertantly put it outside a range that the ECU can control through that wider blade.
Usually a miss would be the first indication you went too far as the ECU would be trying to fire at a point when the rotor wasn't in contact with a plug lead on the cap.
Static idle advance @950rpm +/-50 10deg +/-4 (F mark on crank pulley)
Advance @ 2000rpm 16 deg +/-4
Advance @ 2400rpm 30deg +/-4
Max advance is somewhere in the 37-39deg range (M mark on crank pulley if it's actually present)
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