Q: Arcing from distributor to valve cover

The coil is the only thing that is putting out high voltage. The ignition spark will always look for the quickest path to ground. This is the way electricity works. If you are getting spark jumping to the ground before it wants to jump across the gap of a spark plug, then you will have to look at two things.

First, remove the spark plug wires and inspect them to make sure there is no oil on them from a valve cover leak. Then remove the plugs and make sure the plug gap is set to .031 inches or .80mm. If the gap is too big, this will cause the problem you have. If the plug gap is correct, then make sure they are the correct plug for your engine. They should be NGK BKR5EY or equal plugs.

If the plugs are correct and the gap is okay, and you still have the issue, then you need to have the injection system checked to see if it is running too lean perhaps due to clogged injectors or vacuum leaks. I would also recommend putting dielectric lube at all plug wire connections and on the coil and rotor buttons. This will keep a better contact and less stray arching. Look for any signs of the coil cracked as it will show as a grey or black marks on the coil surface.