Toyota Repair: Distributer Timing, headgaskets, gas mileage

Question
I recently did new headgaskets on my 1994 4wd ext cab pickup with the 3.0 v6. When I put the distributor back in and set the timing it ran like garbage. I checked all timing marks everything was lined up perfect and it was tdc on piston #1. I could only get it to run good with the timing mark set about 1 1/2" before 10 degrees top dead center. I then took it to a shop. They said it had a bad dist and replaced it. I picked it up and the timing marks were way off just like it was before they also checked the timing belt and marks. They told me the timing was right it just looked off because of the way the new dist was grounded. I have never heard of this but the truck runs decent like when I fixed it. The timing light with the jumper set is still about 1 1/2" before 10 degrees tdc I can't get the marks even close. The only problem is my gas mileage went down hill drastically about 7 miles per gallon less. Any ideas. If I reset the dist the right way so I can achieve 10tdc the truck idles but has no power even to get up a small hill.

Answer
What that repair shop is telling you about the distributor being grounded does not make any sense, the only time that I have seen a distributor that can't be set to correct timing was when the timing marks on the left side were off, I still think that the belt timing is off timing is off, remove the top cover and set the bottom pulley directly at the zero mark and the check the cam gears again, I think you will find that the marks on one of the gears is off by maybe one tooth.