Misfires when EGR opens - 2000 Chevrolet K3500 7.4

Working on a 2000 K3500, 7.4 auto

From a stop if you give it ~8-15% throttle it will start to misfire on what seems to be random cylinders until you give it more throttle (>~20%). The timing of the misfires are in time with the opening of the egr valve. I have checked the passages in the intake and the tube going to the valve and there does not appear to be any restriction. The O2 sensors & fuel trim number do not indicate an over rich/lean condition while this happens. I turned the gasket sideways for the egr valve to block the ports and the hesitation is gone, i put it back and the hesitation came back. I have scoped the MAP/TPS/checked the CTS against and IR thermometer and find no anomalies. It is not setting any codes. This vehicle has new fuel injectors/MAF/EGR Valve. I am stumped. One thing that i question is while using a air gap style spark tester on each plug wire end, i start to get intermittent spark past 20kV gap, but testing at the coil it will jump a 50kV gap. It does not exhibit any misfires with quick WOT acceleration. Also when the "cam retard" is set to 0, if i set #1 cylinder to TDC the rotor points ~10deg (eyeballing it) past the "8" mark on the distributor like the timing chain may be stretched. It does make some noise up front like the chain may be slapping the cover but i only notice it when the engine is not up to operating temp. I would greatly appreciate any help with this, it is a nightmare.

While going for another test drive i noticed this time that the EGR position at times was 80% or more at only 10% throttle. I thought surely that can't be correct? Previously i noted that the knock count at times would just go nuts, but i didn't think it was related (duh me) because usually when it was hesitating, it wasn't counting knocks, and the knock retard was 1* or less. Although i've never read anything about a GM opening up the EGR more than "normal" to keep knock under control but i believe that is what is happening. With that hunch i cut the wire to the knock sensors by the ECM and put a resistor in series between the knock sensor input and ground. This keeps the light off (for a little while anyway, my resistor is not quite the correct resistance, but without it it pops on immediately). Now when the EGR opens it is gradual and <~40% at low throttle input, before it was a huge spike to 80% or more at times. I need to do more testing to make sure that is the case because it didn't last long before throwing a code, but i reset it and it was fine for a little while longer so i'm hopefully i'm on the right track now.

The fun continues.. I found that there is a nice big AC spike on the LH knock senor 10mS after cylinder 7 fires. If i short cylinder 7's plug wire to ground it goes away and the knock count pid stops going up. None of the other cylinders exhibit this AC spike in the knock sensor. I pulled the plug out and noticed the piston and the valves/combustion chamber have a considerable amount of "white stuff" on them. I pulled cylinder 1 to compare and it has them as well but not quite as bad. I suppose from here i will double check for vacuum leaks and compare #7 inj pulse with another cylinder. If anyone has any thoughts on this let me know.

Jake wrote: While going for another test drive i noticed this time that the EGR position at times was 80% or more at only 10% throttle. I thought surely that can't be correct? Previously i noted that the knock count at times would just go nuts, but i didn't think it was related (duh me) because usually when it was hesitating, it wasn't counting knocks, and the knock retard was 1* or less... Now when the EGR opens it is gradual and <~40% at low throttle input, before it was a huge spike to 80% or more at times

Did the misfire go away with the resistor installed in the knock sensor harness?

I think you may be on the right track with the knock issue, but I can't say I've ever seen a GM respond to knock by increasing EGR, either. My rule-of-thumb on Knock Retard is five degrees or less, and your results definitely clear that. Does the Knock Retard ever increase under heavy load or wide open?

Did the misfire go away with the resistor installed in the knock sensor harness?

Yes, the misfires went completely away with the resistor in place of the KS's. Eventually it will throw a code (KS circuit) and then exhibit the same issue but even worse (very very egr happy). If i clear the code it will run great again for another 5min or so.

Does the Knock Retard ever increase under heavy load or wide open?

I will need to verify but i am 90% sure there is no knock retard under heavy load.