Yes. It's only a matter of time before everything inside the distributor will be coated with the dust. It makes a mess.

So when looking for a new distributor in the wrecker, when I turn the keyed shaft that goes to the cam, should it turn smoothly?

Yes.

Wow, I just got quoted $450 from Honda for a new housing!! Yikes!! Looks like I will be going around to the local auto-recyclers to find a new one!

$450 has to include ICM and coil. Just the housing is much less ($150).

Here's a picture of the corrosion I was telling you about. Its definitely not metal dust from the bearings
[IMG]http://i52.photobucket.com/albums/g2...z/DSC01185.jpg[/IMG]

I just got a reply email from Honda. I had asked them if the $470 was for just the housing, no coil, no icm, no rotor, no cap... and they said yes... JUST for the housing! Yikes! Had a 2.5hr meeting last minute lastnight and couldn't get to the auto recycler, so hopefully tonight!

That price blows me away! I don't believe it's corossion, but material from deep inside the distributor. The bearing goes and then as the inner guts start to get destroyed and the dust coats everything. That's what happened to mine.

Hmmm so now I had to turn around half way to work because the car could barely idle. It would cough every couple seconds doing 30mph. Pedal to the floor I could just barely reach 45mph. I was about to pick up a used distributor from the auto recyclers, but they wanted $150 for it!! Yikes...

Have you checked the engine's compression?

Just finished checking the engines compression, 175PSI across the board... manual says minimum 135 and correct psi is 185psi, so 175 is good I would say?

Excellent numbers. Resolution awaits the new distributor housing.

Yes, I found a couple at a couple auto-recyclers, and going to try that. I also pulled the valve cover off and the oil was BLACK... it seems that I have neglected to do an oil change lately OOPS! I also noticed that I've got a valve tick that almost matches the sputtering of the engine at idle. So I'm going to do a double engine oil flush, starting with 1L of automatic tranny fluid, run for 15 minutes then drain and refill with clean oil and an engine flush additive, run for 15 minutes, then drain and refill with clean engine oil.

I wouldn't add ATF--it's not safe. Instead, start using high mileage oil, which will safely start to clean the engine and seals. Alternatively, use Auto-RX, which knowledgeable individuals at BOBISTHEOILGUY.com love. I only use full-synthetic engine oil, which keeps the engine super clean.

OK so I changed the oil and replaced the distributor, but now I'm getting code 4 and 16 which is crank position sensor and fuel injector... grrr... still running rough.

Replacing the distributor (with a good one) will take care of Code 4. It looks like your replacement distributor is no good. One of the distributor's internal sensors is the CKP (Crankshaft Position Sensor). On this site, we have had many problems with even new aftermarket distributors for Hondas.

Yeah, I guess I'll be looking at getting a new distributor then!

So I ordered a new distributor off Rock Auto. Going to be putting it in tomorrow. Crazy thing is, I ordered it this morning at 7am, and by 330pm just before I left work I checked the tracking and it was already up here in BC. Must have caught the last flight out of Texas!

Great. Now the drama should be coming to a climax--I bet it fires right up.

Hahah yeah so do I!
I'm really grateful for all the help. You really know your Hondas!