Hi Davy,
It sounds as though the rotor is catching on the terminals inside the distributor cap. The old distributor cap will probably have had wear on the terminals.
Do you have play on the distributor shaft? If you do, that could be allowing the rotor to touch the terminals. That may be what cracked the old cap.
Brass filings floating around could well be causing the sparks to track across to earth.
The fact that N02 was fouled could indicate a dodgy plug lead.
Roger