Yes, a correctly set up vacuum advance should be used, but, it needs to have a stop built/installed to restrict the total number of degrees it gives, then, connected to full manifold vacuum ONLY. Do not connect it to full manifold vacuum before a stop is made and fitted, you will add too many degrees.
On that Blaster coil which one, and on its bottom, what "Made in xxxxx" is there, Mexico, China??? It makes a giant difference.
And, to test the coil, take it off the car, and find a parts store with an off vehicle run tester, put the coil on the tester, and let it run for a while, at least, until it gets up to operating temperature. Resistance tests are no longer valid ways to diagnose coil issues.
From what you said, the issue occurs when the system gets to operating temperature, let the coil run on the machine. Better yet, if you still have a dead stock round coil to fit, try it on the system, it will work, and if it is the coil, the problems should stop immediately.
Blaster coils have been serious problem causers for the last 15 years.
What is a 85551? If it is a Ready to Quit full distributor with its own module, it, too, might have issues.
16/18 degrees initial, WAY TOO FAR ADVANCED for a 406, the 3.750 stroke doesn't want, nor need that much initial timing, more like 10/12 max, and a total of 30 to 32 degrees.
If you want a full pictures and instructions package sent to you, ABSOLUTELY FREE, WITH NO STRINGS, send an email to [email protected]
ask for them, and I will send same.