A 79 350 from an impala was rated about 150hp (maybe lower). Low compression, very poor heads, and a tiny cam.
Get some 64cc performance street heads and a mild RV type cam and you can double the power.
Yes, retarded cam timing can lower the values obtained during a compression test. What timing chain set was in the motor?
Did you check compression with the throttle open? Makes a difference.
For a low compression smog engine, I would set up the timing by revving the engine to 4000 rpm and set max timing to 40 degrees. Rev it up, check the max timing, if it only makes it to 32, then add 8 more to the initial, and check it again.
Get a HEI distributor, please.
Are you sure you have a 350 and not a 305?
The engine could have been sitting a long time and not stored correctly which could have messed up the cylinders and/or rings.