Magnetic Pickup Toast? (VID)

There shouldn't be much movement in there at all. Did you see any little metal dust particles in the bottom of the distributor bowl? Looks like the distributor bushing might be worn-out. That, or the distributor gear. I'd take-out the dizzy for better inspection, it only takes about 10 minutes to check it. My bushing was just slightly worn and it ended-up chewing-up the PIP.
 
There shouldn't be much movement in there at all. Did you see any little metal dust particles in the bottom of the distributor bowl? Looks like the distributor bushing might be worn-out. That, or the distributor gear. I'd take-out the dizzy for better inspection, it only takes about 10 minutes to check it. My bushing was just slightly worn and it ended-up chewing-up the PIP.

How do I remove it, and isnt it a pain to get it back in the same position without messing up the timing etc?

I was just thinking of getting a reman unit from NAPA for $109. Its gonna go sometime or anyother just another monkey off my back lol.
 
I got a reman one from a local parts place for $140. Before you take yours out, set the rotor in place and mark on the distributor body where the center of the rotor lines-up with a sharpy marker or a grease pencil. If you want you can also mark the bottom of the distributor shaft where it goes into the block, but its not necessary. Then just take-out the 1/2" head bolt and hold-down that holds the distributor in place and pull it out carefully and straight-out. If you're putting-in a reman., you'll probably have to transfer the top part of the bowl (held by 2 screws) from the old to the new dizzy, so your mark will be in the right spot and you just have to line it up with the center of the rotor when you put it back in. The timing should then be pretty much exactly where you left it, but just use a timing light to check for sure.

As for the link you posted, that looks like the '87-'93 5.0L dizzy, it won't work on our cars because ours has the TFI module on the fender, not on the distributor itself like the Fox-style.

Hope this helps, bud