1987 2.3 runs like dogsh*t

Replace the O2 sensor. Had a similar problem with a 2.3 back in the day. They are cheap. Worth a try. I always found codes to be kind of useless in those old systems.

Typically if the timing belt is off a tooth retarded, it will run rough and have no power (or "less" power than usual...)

Advanced a tooth or two, it'll run real rough and the power will be "ok" (still off but not noticeable right away), but power will fall off big time as RPM comes up. The rough idle is a dead giveaway.

yes it's possible to have the cam timing off and the engine still run. They are non-interference engines meaning the belt can be throwed off or just broken and the engine freewheeling and nothing happens, it just dies. No bent valves. That's one thing I like about the 2.3. That and they're pretty easy to work on.

Also don't forget that the distributor (pre EDIS 2.3's) runs off of the aux pulley, which is run by the timing belt. It's real easy to get it off a tooth, which will severely retard or advance the ignition timing. Check timing with a timing light, spout connector removed, should be 10° BTDC. Also I like to check the integrity of the timing marks on the cover as it's just plastic and sometimes it's "off" a little. To do that you have to verify TDC, which is kind of hard with the head installed. Can be done with a screwdriver through the spark plug hole and rotating the engine by hand slowly, and that will get it close but it's not 100% accurate in doing it that way. With piston #1 at TDC the 0 mark on the cover should align perfectly with the notch in the V-belt pulley. I mark the notch with some white-out so it's easier to see (because I'm old).

since you said it had a surge when you got it, did you check it for any vacuum leaks?