You have a G32B turbo motor IIRC, as 4g61t motors were not available stateside until 1989, or 1987 in many areas closer to AUS/NZ and Asia. So, unless you are in Asia or have an Asian pre-face lift Lancer/Colt, you have the older distributor style and non-Sirius Mitsubishi motor.
With that said, when you reset the timing, did you rotate the distributor to achieve this? Are you using a factory manual for your car, which shows setting the timing? Do you have vacuum advance (vacuum hose and diaphragm) attached to the distributor housing? This hose needs to be removed, and plugged when setting the timing, because otherwise the vacuum is going to pull timing away from the base setting that you want, ie. it will advance the timing, which in effect will have your timing retarded, I believe, but no way of knowing how much. Likely 5 degrees or so. Recheck, and compression check which never hurts after changing the head gasket. Also was the distributor cap and rotor cleaned or replaced?
Did you have the cylinder head checked for flatness with a proper bar and feeler gauges? Machine shop?
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