Mark - The distributor will still indeed rotate with the crank with a busted cam gear hub. But the valve and ignition timing may be off. The "thunk" you hear is also consistent with a bad cam gear. (This happened to my Super M. It still ran - but poorly - and it had a deep, ominous knock).
You can determine for sure by removing the hydraulic pump/distributor assembly. Then reach inside the timing gear case and try to wiggle the top of the cam gear. If you can move the gear AT ALL with finger pressure the cam gear hub is broken.
Tip: Before removing the hydraulic pump turn the crankshaft until the distributor rotor is near the #1 nipple and the 1st notch on the fan pulley is at the timing pointer. This simplifies retiming when replacing the hyd pump/distributor.
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