[CSGAS]

A GM HEI, or nearly any electronic ignition, generates enough voltage to arc directly through plastic like the kind used to make caps. Electricity follows the path of least resistance though, so the engineers try to ensure that the least resistance takes the electricity to the cylinder desired. rotors, contacts, and wires are how this control is attempted.

If the cap terminals were corroded first, then the electricity meant to travel through the terminal started looking for an easier path to follow, like to the next terminal to the left or right of the bad one. This is what "arcing" refers to, as it will arc across plain air or through the cap itself. I am sure when you take the cap off you will see the inside looks like it has been eaten away.

Before hunting down any other problems, lets fix the known issue. Replace the cap and rotor, which are both now damaged. When you reassemble everything make sure it goes back together as intended. The rotor button (in the cap) should actually contact the center lead on the rotor as it turns, etc. Make sure every wire seats properly on the terminals. Then we'll see what the condition is and if any more tuning or troubleshooting is needed.