still problems Need help please

[88fivepointoh]

my timing is at 12 degrees... I pulled the distributor out i lined up the crank to 0 degrees and put the distributor right on the #1 plug.. is that correct.. I also had my tfi checked and it tested bad.. so i put another one in and still the same issue.. i noticed that sometimes after i drive it for a little bit the rpm's that i can reach drop from 4000k to 3000k then i can'tr even reach 2500k without that rev limiter effect.. i also noticed like it runs, as if the timing spout is out when it is warm and if i pull the connector ot it makes no difference.. it is very strange.. i have a hunch that the ecm is bad and doesn't know what to do with timing.. any idea's? the tume up is in good shape.