PROBLEM SOLVED!
With the engine at operating temperature, I was able to ground the wire that connects to the transmission switch to the side of the transmission and heard the solenoid click on. When the solenoid clicks on, that is the state where vacuum is not permitted to pass through the side port on that back of the solenoid...no vacuum advance. This confirmed my theory that the normal operation of the solenoid is that when the system is grounded, no vacuum advance occurs.
That means that in every gear except 3rd and 4th, the system is grounded. In 3rd and 4th, there is a movement that takes place in the transmission that passes over the ball at the end of the transmission switch. This allows the ball to extend...breaking ground. At all other times, the ball is compressed and the system is grounded, preventing vacuum advance.
My problem? In addition to the other problems listed above, the transmission switch had a washer on it. This washer was too thick which prevented the switch from being compressed when it should have...which prevented a ground...which allowed vacuum advance at all times. Once the washer was removed, everything works when and as it should.
Awesome! Thanks for your help and if anyone needs assitance with this for their own setup, I'll be glad to help.
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