Rotor arm looks a bit past it, if you choose to replace it, get a genuine Lucas one and the same for the cap, more expensive but well worth it. I've said it before and will say it again, do not put pattern ignition parts on, I know they are cheap but you'll find they won't last.
When you check vac advance, suck on the pipe then put your tongue on the end, your tongue should stick to the pipe (if you see what I mean) if it doesn't then either the vac advance unit is shot or the pipe has a hole/split in it.
I'm not much of a carb guy but it might also be worth checking to see if the pistons rise when you open the throttle (engine running of course!) If you're not getting smooth movement of the pistons and needles then you're going to struggle to make good power - saw something similar on a RRC a couple of years ago, different carbs but after a bit of investigation found the diaphragm in one carb was split so needle wasn't rising and carb not working properly, certainly worth checking.
As has been suggested a compression test would be worth doing as well as setting up the ignition timing (and dwell if it has points). Have just been doing similar on my '91 but it is efi, found duff vac advance unit and failing ignition amplifier. Replaced vac advance unit, ignition amplifier, dizzy cap and rotor arm - all fixed and running much better.
Nearly forgot, movement on rotor arm is normal, should rock when light pressure applied back and fore, you should also hear the mechanical advance mechanism moving when you do this, sounds like a dull clunking/clicking sort of noise, this means the mechanical advance hasn't seized up, the rotor arm should spring back to position against spring pressure.