If your compression test are fine and you have no vacuum leaks or fluid cross contamination I would not mess with the heads or manifolds.
As far as the computer goes, Alldata says:
For a 96 chevy tahoe, your vehicle may vary:
VCM REPLACEMENT/PROGRAMMING
Service of the VCM consists of either replacement of VCM or reprogramming of the EEPROM. If the diagnostics call for replacement of the VCM, it will be necessary to transfer the PROM and program the EEPROM.
NOTE : When replacing the production VCM with a service VCM (controller), it is important to transfer the broadcast code and production VCM number to the service VCM label. This will allow positive identification of VCM parts throughout the service life of the vehicle. Also transfer the PROM.
CAUTION : To prevent internal VCM damage, the ignition must be OFF when disconnecting or reconnecting power to the VCM (for example, battery cable, VCM fuse, jumper cables, etc.).
CAUTION : In order to prevent possible Electrostatic Discharge damage to the VCM, do not touch the connector pins or soldered components on the circuit board.
VCM REPLACEMENT/PROGRAMMING (WITH KNOCK SENSOR (KS) CALIBRATION PROM)
REMOVAL PROCEDURE
1. Disconnect the negative battery cable.
2. Remove the connectors from the VCM.
3. Remove the spring retainer off and over the rail of the VCM. Slide the VCM out of the bracket at an angle.
4. Remove the VCM access cover.
5. Remove the PROM/Knock Sensor (KS) module.
6. Inspect for the alignment notches of the KS Calibration PROM.
7. Carefully set it aside.
8. Do not open the KS Calibration PROM.
9. Remove the new VCM from the packaging. Check the service number in order to make sure it is the same as the defective VCM.
10. Remove the access cover.
NOTE
* The Knock Sensor (KS) module must be transferred to the replacement VCM.
* The replacement VCM is supplied without a EEPROM program, the replacement VCM must be programmed before the vehicle will run.
* Using the thumb and first finger, remove the KS Calibration PROM by gently squeezing each end of the blue KS Calibration PROM
* Do not remove the cover of the KS Calibration PROM. Use of an unapproved KS Calibration PROM removal methods may cause damage to the KS Calibration PROM or the socket.
INSTALLATION PROCEDURE
NOTE : Press only on the ends of the KS Calibration PROM. Gently press on the KS Calibration PROM until it is firmly seated in the socket. Listen for the click.
1. Align the notches of the KS Calibration PROM with the notches in the KS Calibration PROM socket.
2. Install the KS Calibration PROM in the KS Calibration PROM socket.
3. Install the access cover on the VCM.
4. Install the VCM in the engine compartment.
5. Install the connectors to the VCM.
6. The MIL, antilock and brake lamps will continue to be enabled until the VCM is programmed. Once the programming is complete, the lamps will turn off and normal operation will occur.
7. Connect the negative battery cable.
CAUTION : In order to prevent possible Electrostatic Discharge damage to the VCM, do not touch the connector pins or soldered components on the circuit board.
8. Proceed to the EEPROM programming .
EEPROM Programming:
CAUTION : The ignition should always be "off" when installing or removing the Vehicle Control Module (VCM) connectors.
1. Set-up:
o Battery is charged.
o Ignition is "ON."
o Battery/cig. lighter Connection secure.
o Data Link Connector (DLC) .
2. Refer to up-to-date Techline terminal/equipment user's instructions.
3. If Vehicle Control Module (VCM) fails to program, do the following:
o Check all VCM connections.
o check Techline terminal/equipment for latest software version.
o Try again to program the VCM. If it fails again, replace the VCM. Refer to VCM replacement . See: Control Module Replacement
4. Perform the Idle Air Control (IAC) valve reset procedure with the scan tool. use misc. test.
5. For a functional check perform one of the steps:
o Use the Techline terminal and equipment in order to perform the On-Board Diagnostic (OBD) System Check
o Refer to Powertrain OBD System Check . See: Testing and Inspection.
Btw if that distributor code is accurate then the mech can try this:
TEST PROCEDURE
The ignition timing cannot be adjusted. The distributor may need adjusting to prevent crossfire. To insure proper alignment of the distributor, perform the following:
1. With the ignition OFF, install a scan tool to the DLC.
2. Start the engine and bring to normal operating temperature. IMPORTANT: Cam Retard Offset reading will not be accurate below 1000 RPM.
3. Increase engine speed to 1000 RPM.
4. Monitor the Cam Retard Offset.
5. If the Cam Retard indicates a value of 0°+/-2°, the distributor is properly adjusted.
6. If the Cam Retard does not indicate 0°+/-2°, the distributor must be adjusted.
ADJUSTING PROCEDURE
1. With the engine OFF, slightly loosen the distributor hold down bolt. IMPORTANT: Cam Retard Offset reading will not be accurate below 1000 RPM.
2. Start the engine and raise engine speed to 1000 RPM.
3. Using a scan tool monitor Cam Retard Offset.
4. Rotate the distributor as follows:
4.1. To compensate for a negative reading, rotate the distributor in the counterclockwise direction.
4.2. To compensate for a positive reading, rotate the distributor in the clockwise direction.
5. Repeat step 4 until 0°+/-2°, is obtained.
6. Turn the ignition OFF.
7. Tighten the distributor hold-down bolt to 3 Nm (25 lb. ft.).
8. Start the engine, raise engine speed to 1000 RPM and recheck Camshaft Retard Offset.