[JAM1775]

I agree from the appearance of the carb you have fuel backfire . That color is not richness but unburned backfire fuel. First you must start all tests with cleaned up plugs for ease of starting. I bet you have a blown power valve DUE to the backfiring. I had a SA 406 and found another problem caused the power valve to blow out. The I had two probelms !
Replace the power valve. It is located in the front metering block, hex shaped w/rubber ,brass center abut the size of a quarter. Get the 6.5 rated one. My past SA 406 problem had to do with two things, both distributor related. SA did not secure the "star" in the center of the distributor with a rollpin. I have a mental lapse on the proper term for the "star" but it is the thing sitting on base of the center shaft of your distributor photo, with the cap, rotor removed. Just try to lift it. It should have minimal play in the "shaft only" but should not lift off ! When my motor old SA 406 needed revs the star would slightly rise up, causing misfire.
Despite expectations, the dist cap contacts were not that damaged but the star did cause misfire and it misfired most as it spun above 3000-4000 rpm because it lift up and down. I think I see the little rollpin, installed in the slot on the star's shaft but you may want to double check and make sure it is secure.

Second problem I found . Check the SA provided small harness that adapts the gray Ford distributor to the main harness heading toward the MSD box. This small low voltage harness comes out from your distributor and jacks into a two pronged MSD line about 10" away from the distributor. This adaptor line is replacable as a Ford Duraspark to MSD adaptor in Jegs or any race shop.($20) I found mine to be damaged. Some insulation was slightly cracked causing arching of the low voltage signal from the MSD box to the Duraspark distributor. The cracks were very small, like a spider cracks but both wires were cracked inside the harness. The harness was subjected to some extreme treatment or condition because of the white discoloration/cracks along its length. So, my SA 406 ignition problems caused my SA 406 to run okay at times and misfire at other times. This eventually caused backfire which blew the power valve. These were problems I had to iron out within the first 500 -700 miles of owning my SA 406. It seemed as weird coincidence to me but hey....you are on the hunt ! It does not hurt to check all the little steps. you will eventually track your problem down. The 750 Holley is engine builder Bill Parham's choice of carb for that motor....but that carb's power valve will not sustain more than a few carb backfires before cracking. Replace that first just for insurance at $10. Who knows you may already have resolved a problem but still remain with a blown carb power valve. Clean your plugs, replace the power valve ,check your distributor star and visually scrutinize your wires leading to the distributor for from the MSD. Keep the faith ! NOTE:: That motor has solid lifters. Make sure thay are periodically adjusted once you iron out your start up kinks .