IML: Engine Problems

Last summer my father bought a 2005 Four Winns sport boat with a 2bbl Chevrolet 305 from Volvo Penta. It was and still is completely stock with 9.4:1 compression, hydraulic roller lifters, 2bbl Holley carb, and Delco EST distributor. It is not computer controlled with the exception of the distributor. Anyway, onto the problem.

After the engine warms up and idles it makes a knocking/ticking sound. I can't really tell which...it seems to be a "knocka knocka and ticka ticka" at the same time. It's happened since the engine was new and right now it has about 45 light duty hours on it. It only happens at idle up to about 1400 rpm and then seems to go away. Abnormal vibration is absent except when travelling in forward gear with the engine at about 1000 rpm. Then the whole boat shakes moderately; it's nothing that'll chatter your teeth out but it's definitely noticable. Also, when given WOT the engine will only get up to 4200 rpm. Volvo and GM recommend that it should run between 4400-4800 and Four Winns is insistent that the propeller supplied with the boat is correct and will run the engine to about 4600 rpm. My father and I agreed that the gas we were using (Mobil 87 - regular 87 recommended by GM) was probably detonating and forcing the distributor computer to retard the timing. Next fillup we put about 1/2 tank of 93 in with the 87 so it would've combined to about 90. We started up the engine and ran it to operating temperature (160 degree t-stat) and yet it knocked just as bad as before with no improvement in top speed. We took it back to the dealer to have them check the carburetor and ignition settings to which they said were fine. (I can't check the timing myself because the distributor needs to be put in "standby" mode; some special part is needed that I'm trying to order). Could it be something like a leaky lifter? Something more serious?