just pulled apart my old distributor to check how it looked and found this. Its a mallory distributor running through a msd digital 6 with a high power coil.

new setup is same dist, same coil, but with a msd 6al2 programmable

http://i51.photobucket.com/albums/f378/darkostoj/CIMG2105.jpg
http://i51.photobucket.com/albums/f378/darkostoj/CIMG2106.jpg

The contact area was dirty. This causes arcing between the rotor and cap. If you weld at all, it's like when the surface is dirty and the arc sputters.

I had a MSD do the same thing and the engine didnt even have 5k miles on it. I would like to know too.

bad contact of some sort.....impurity on cap or rotor tab like grease, oil.....tab too short and not contacting well. Like Nantooch said just like welding with oil , paint, etc in the weld...spattering arching mess and making lots of heat at the same time.

looks like a moisture problem to me. Some WD-40 would help from time to time.

poor contact between the rotor pin and the cap...

looks like a moisture problem to me. Some WD-40 would help from time to time.
It may have been moisture in my case. You could see it when I took my cap off. Everything on my car was new MSD so I hope it wasnt because of bad contact.

Do a search. There were some good pics of a bunch of msd stuff doing this.

Looking at the rotor, I don't see the wear spot from the cap button to the rotor tab.
As said, spark was jumping across the gap.
Maybe bend up the tab on the rotor to contact the stationary carbon contact on the cap.

I don't see the wear spot from the cap button to the rotor tab.
So as Everett says, but when this happens the contact on the top of the rotor is normally 'eatten' away also.

Done any welding on the car?

And never WD40 the inside of a dizzy....it creates a damp surface that over time dust builds up in and eventually makes issues even worse....
Need to clean out or dry , do it properly, use dry air from the compressor, and a small brush