Nissan Repair: 1989 N Sentra has power surges, lacks power, and dies., power surges, o2 sensor

Question
Hello,
I am nearing the end of my rope, but am not ready to drop yet!
I own a 1989 Sentra. New O2 sensor, 150K highway miles on it, but otherwise in good shape. the engine surges and at highway speeds it will have very little power. depressing the accelorator pedal feels like when you are push starting a car before it finally sparks; there is poor pedal feel, and finally, near the bottom of the pedal travel, it "catches" ; there is a spark and a surge of power, just like bumpstarting. This is accompionied by a puff of black smoke and I am convinced it is something electrical. I have read many other posts and the girl who owned the car before me did drive it without the oil cap on so the engine is/was somewhat soaked in oil. i noticed that the distributor guts have some oil in them when i took it apart. Now, my question is, is this the only place to look? Can the distributor be cleaned, or must it be replaced? Is the oil a leak from inside the Distributor via a leaky seal? Is it viable using a part from the wreckers? You mentioned fuel pump relays as well, but there is good pressure in the line. I am convinced it is electrical and have also replaced the plug wires. The ECM reads good (after changing the O2 sensor)

I really appreciate your service, thank you so much!
Sincerely,
Sean Clancy  

Answer
Sean,

Replace the distributor with a rebuilt one and clean the engine with a good degreaser and you should be fine.  Rebuilding the distributor yourself is not worth the trouble since it costs about the same in parts if you did it yourself.  Also, it comes with a new cap and rotor and with Nissan they use a drive dog so there are only two ways to install it.  All you have to do it make a mark on the distributor body in relation to the engine and install the other one the same way with the rotor in the same orientation and you will be good to go...