That part under the steering column is called the ignition switch.
When the key turns it slides a rod that moves ignition switch into its various positions, making and breaking contacts as you described.
HEI system requires a distributor with vacuum advance, do you have that and is vacuum hooked up correctly.
When you REV the engine the spark timing must change or you won't have much power and you can also get backfires, vacuum advance does that, it rotates the sensor inside the distributor so spark happens earlier or later.
Most vacuum advance distributors use an intake vacuum, so a vacuum source between intake valves and throttle plate, so you can't use a carb vacuum port above throttle plate, only below throttle plate or on the intake manifold itself.
Some did use Ported Vacuum, above throttle plate, you need to look up which one you need on your distributor.