Nothing wrong. That expensive distributor likely never did fit properly, and due to factory build tolerances, some Panteras have more (or less) space than others. Sometimes, the 2 piece motormounts are mis-assembled during an engine change so NO dizzy will fit with good clearance. Basically, there's only enough for stock 1970-era small cap distributors. Big cap (or 'crab-cap') distributors have always been a problem on stock Panteras (which is what I think you have; can't quite see in the photo). So in the mid- '80s when Ford began installing big cap e-distributors in front engine cars for stronger ignition and ozone suppression, the aftermarket followed but there were clearance issues in most Panteras.
What happens is, after installing the distributor in the restricted space, usually after laboriously moving wires around to fit, you'll find barely enough space for it to fit and the engine will run. But while driving under load the whole engine moves around slightly on the rubber motor mounts. This allows the dizzy cap to hit the firewall, dislodging it and breaking the rotor, which means you get to meet a tow truck driver unless you happen to have spare parts on board.
To make the MSD dizzy fit fairly easily, you can slot or redrill both the motor mount bolt holes back toward the tail lights a bit, which shifts the block and ZF backward (must also re-shim the ZF in its mounts). This can be done without pulling the engine/ZF or modifying anything else- exhausts, lines, wires & hoses and the shift-shaft can often stay like they are now. I moved our engine almost an inch back and another inch down, without having to remove or readjust anything. This helped remove the firewall bulge in the cabin for more seat clearance and a flat-firewall mod.
Beyond an inch, the step in the oil pan will hit the rear crossmember, the shift rod's rear u-joint will hit the left inner fender and a bunch of other things will interfere. The halfshaft u-joints can absorb far more than an inch of relocation without issues. Big block conversions move back a full 4 inches without problems! I don't recommend pounding a dent in the firewall as it's very easy to break the rear glass or make R & R later more difficult.
Or you can use a rebuilt stock dizzy with a small cap, use a stock or drop-in electronic kit for most of the upgrade benefits, and sell the MSD to a Mustang owner. Good luck, Sig.