does the rotor button actually touch the posts on the cap when it turns? My posts have grooves cut in them where the rotor button point is hitting them. They are kinda covered with a flaky substance too.
No, not supposed to touch.
Clean the cap contacts with a brass wire brush and use a black dry erase marker and cover the contact.
Crank the engine over or let it run for a moment, turn the engine off and check the contacts for wear.
The whitish flaky stuff is corrosion.