What four holes are we talking about? And LED.
The idea of pulling a plug and grounding it is (a) to see if there is a spark, and (b) to see If spark happens near TDC. You can do this by turning the motor over manually, or by turning the dizzy.
Picture the rotor turning clockwise (normal direction) towards the #1 contact in the cap; when it gets there, the plug should spark (ignition on). Then picture instead turning the distributor counter clockwise towards #1 from the other direction, having turned it clockwise first to move past #1 contact.. It will spark #1.
I assume 123 works the same. But i'm not familiar with 123 TDC setting.
I thought you got the engine running pretty well. When you had the original dizzy in there, did you explore the other suggestions to improve starting, running, etc. Problem now is that you may have introduced another variable without confirming that the old dizzy was to blame.