I have a '68 327, holley 600, TH350. It sounds and runs great in neutral, vacuum steady at about 17, timing at 14 BTDC. As soon as you put it in gear it starts running very rough, vacuum drops to 12 or 13 and is somewhat erratic and the car has no power. I did lose a rocker last week. I replaced it and it seems fine. Could I have damaged a valve? spring? lifter? It feels like it is running on 7 cylinders when it is in gear but runs fine in neutral.

I would first pull the spark plugs and do a compression check to make sure you have equal pressure in all cylinders.
If all is good take some carb cleaner and while running the engine spray around your intake manifold and area's where you have gaskets to see if you might have an air leak. You should notice an increase in idle if you do, this will tell you if your gasket is bad and sucking in air.
Others might have some other items to check on, but this is what I had happening when I had this simular problem.
Good Luck

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Mike
68 RS Convertible
http://www.camaro.lookscool.com

kk - Follow what Mike suggested. If everything checks out OK there AND if it was an exhaust valve that You lost the rocker on, I would suspect the power valve in that Holley. It only takes one good "sneeze" back through the carb to damage it ! Usually when they go You will be able to see black smoke out of the exhaust (rich mixture). -Billy

I changed the plugs. All were nice and tan colored...As far as the timing goes,it seems to only advance to about 24 degrees, even at 4000 rpm. Should you see a difference with and without the vacuum plugged? It seems the same with or without being plugged.

you should see a difference with the vacuum advance even at idle. check the vacuum line to the trans modulator and the modulator it self on the back of the trans