Does the distributor mounted TFI Module need to be tight against the distributor body, like a good electrical connection?
Both the threaded holes on the body are stripped out so I cant tighten them. I was going to get a bit longer bolt and put a nut on the back side of the hole I can. The other bolt stays in the hole just wont get tight. Would this cause any problems?
There is no electrical connection between the TFI and distributor mount. The mount acts as a heat sink. A poor mechanical connection between the two can lead to the TFI module overheating and causing other issues. I would suggest making sure there is a good coating of thermal grease on the back side of the TFI before tightening it down.
Thermal grease is not Dielectric Grease. Thermal grease is for heat transfer and is white in color. Dielectric Grease is more or less clear and is for corrosion and to keep spark plug boots from sticking.
The issue I fear has been described, save 1, Too much movement could cause it to catch inside spinning components and shred your Distributor guts (not good) I would follow the advice the others have already given.