Last week I put my 1.7L engine in. I rebuilt it a few years ago and
just got around to working on the project again. Well after valve
adjusting and timing I started it last week. This week I pulled the
distributor to clean it up and re-time the engine. I'm trying to figure out
why when I rotate the distributor to static time the no.1 cylinder at TDC
the vacuum advance hits the cold start valve connector. Has anyone
see this before?

It is quite possible that when you pulled the dizzy you also lifted the dizzy drive gear. When you reseated it, it is a tooth or so off.

Or you assembled the dizzy drive shaft incorrectly when the engine was rebuilt.

You can simply change the HT wires on the cap to a different position so that static timing #1 will give you enough swing on the dizzy to time it running,

Or, you can rotate to TDC #1, pull and reinstall the dizzy drive gear in the correct position. Remember the washers that might be underneath it though,