Your engine is fine with the vacuum advance connected to full manifold vacuum where there is vacuum to the vacuum advance canister on the distributor when the throttle is closed.
The timing does NOT retard when the throttle plates are opened. It will continue to advance. There is much debate as to which connection to use. Timed vacuum, where the connection is made so that there is no vacuum with a closed throttle, started being used as an attempt by the manufacturers to reduce hydrocarbons and does not necessarily make your engine run better.
I have my performance built 5.0/302 hooked up with full vacuum. It will smooth out the idle, increase fuel milage and make the engine run cooler. It is explained at the following web site. Even though it discusses the application with Chevy engines, the principals are the same no matter who makes the engine.
www.lbfun.com/Corvette/Tech/vettetech.html Scroll down and click on to "Timing and Vacuum Advance" then click on to the article "Vacuum Explained" by Lars Grimsrud.
This article explains why you should have the vacuum advance connected to full manifold vacuum, the way that your engine is hooked up.