I too was actually wondering if the cover would help reduce the amount it was arcing, but at one point it was so violent i have a feeling it would occur regardless.

While I wait for a night to go out and check the spark location (I don't have a garage) I may have stumbled across another lead (no pun intended, you'll see why in a second). There is a 3 wire connector that comes out of the distributor base and goes into the distributor cap. I assumed the black wire in the middle was ground, tested it with a multimeter to make sure, and it was indeed a ground. The problem is, where this connector attaches to the cap there is no contact for the middle ground wire, so there's a grounded wire coming out of the distributor base going to nothing. Should I be attaching this to the grounding strap to the coil somewhere? Maybe where the coil has a grounding strap to a mounting bolt?