Vince;

That washer should be an insulated shoulder washer of fiber...the shape, size, and material are pretty important...after this many years of service, they sometimes deteriorate (if it wasn't replaced with something less suitable, which I have to say a "rubber washer" most definately is!)... I wonder how long that rubber washer will last in there before it too succumbs to the heat and voltage present.

...and while were on the subject, the insulating strip inside the housing on the same bolt, which keeps the points spring from touching the inner wall, was originally paper...that's probably due for replacement too...I'd recommend a 0.010" thin piece of G10 (fiberglass filled epoxy circuit board material for this).

Maybe someone else can confirm firing order and post a static timing procedure for you here...I'm no B16 expert, but info here (http://www.sw-em.com/Volvo%20Ignition%20from%20Scratch.htm) MAY help if you transpose it for your B16.

Cheers