the vacuum hose should only have vacuum during load (venturi vacuum). should have NO vacuum at idle.
set timing at 8* BTDC with vacuum hose disconnected and hose plugged.
you should also adjust the carb per instructions if you haven't done that already.
after setting timing and putting vacuum hose on correct port. you can bump the timing up in 2 degree increments and test drive car to make sure there is no detonation (pinging). if you are running 87 octane gas then 8* maybe 10* would be max, most carbed mustangs are 10*. | 
