well if the engine needs 12 degrees of rotation for the spark to fully combust the air/fuel mixture at idle (1000 rpm approx.), then its gonna need a bit more degrees if the engine is running at 4500 rpm, because the rate of combustion stays the same, but the rate of rotation doesnt, so it may need 25 or 30 degrees before the spark completely combusts the mixture and force is applied to the piston - thats spark advance and the eec automatically does it with timing curves programmed into it
yes point the light at the harmonic dampener, somebody probably painted that yellow line and nobody knows what it is on stangnet, youll have to go under your car and look closely, because all the degree marks are etched into the dampener, so just read which one is painted yellow, on my old car there were two white lines, one at 10° and one at 14°
spout lets the computer advance timing, with it out you're setting the "base timing" and thats the only control we have over timing unless you get advanced software like the twEECer system, but dont worry about that
you can remove the spout while the car is running, thats what its designed for
one point of safety i might add... ive seen a lot of people just grab the distributor from the top where the wires are and turn it from there, which may not hurt you at all, but keep in mind there are a lot of volts and amps going through those wires many times a second, i like to turn the distributor from the ignition module, where there are a lot less electrons to kill me. yea there's insulation on the wires, but many times when people get hurt by cars there are measures taken by manufacturers to prevent that, they just didnt work very well
good luck with your timing, if that doesnt solve your running rich problem, try pulling codes because you may have some bad sensors or something ... LATE