1986 Camry LE, 2S-ELC engine

Quick summary: bought car 2 years ago with 78k miles, was knocking some under load. This year,had to replace water pump and timing belt (broken bearing on water pump pulley). When I started on that repair, I found that the cam/crank timing was off, with TDC on cam coming when crank was 10 degrees after TDC. I corrected this, and while I was in there, checked ignition timing for the knock problem. It was about 35 degrees BTDC, while factory manual shows 10. Reset it to 10, and it started and idled OK, but hesitated on any acceleration, and ran rough at speed (missing, poor acceleration). I set it to 20, and it runs OK now, knocking may be gone - have not driven it under worst conditions for knock yet, so cannot be sure it is totally gone.

But the bottom line is - why would it run so poorly at factory timing spec?

Thanks,
Don