Yes 45 dist degrees is 90 at crank.

OK so "the timing you see" meaning you are checking timing with a timing light? Is that with a dial back light or a fully degreed balancer? Did you verify that TDC mark is correct?

Third paragraph is expected.
That last statement about the variable distance between sensor and rotor is a bit confusing. Do you mean that one flag or gap on the shutter is a different size than the others? That's how most other systems determine #1 location.
This implies you are going SFI vs batch fire, is that correct?

it is batch fire.
so all the slots are uniform.
where ever the pick up is, when ever it sees a vane, it will fire.
by making sure the rotor is lined up to number 1 when it fires, I ensure that it is correct.

I have to tell the system where number 1 is from that vane. because it can change.
and it is based on degrees at the crank. not degrees at the distributor.

and yes I verified tdc and where number 1 pointed first.

so right now timing is "correct", but in the no fly zone. I need to move it out.

OK that clarifies alot.

So what happens when you adjust the sensor to the correct location? I'm assuming the engine runs poorly or not at all(backfire through carb, severe miss etc)

This actually does bring us back to distributor phasing. If you turn the distributor housing the needed 22 or so degrees, the rotor no longer points at a terminal in the cap.

You can try to remap the timing program AND set the sensor in the correct position to verify this. For example put in 30 degrees of retard at idle and rotate the dist housing 30 degrees (advanced) to put the sensor in the right position.
Does the engine run? Poorly probably but it should idle.