Timing on the XJ is controlled by the CPS and is not adjustable.
Having said that, there was a factory tech bulletin back around '88 or '89 on "indexing" the distributor, which may (or may not) help you. Strictly speaking, this does not change the timing, because the point at which the ignition fires is still controlled by the CPS. However, if the distributor isn't indexed correctly, when the ignition fires the rotor isn't pointed at the right terminal on the cap, so you may get a weak spark.
The procedure is to take a sacrificial distributor cap (your old one is perfect for this, if you have it). Use a Dremel or similar small grinder to cut away the side of the cap to expose (but not remove or damage) the #1 turret and contact.
Remove the regular cap and install the modified one. Slowly rotate the engine (preferably by hand) until the #1 cylinder gets to TDC on the compression stroke. At TDC the tip of the rotor should be PAST (beyond) the #1 contact, with a gap of 0.020"
If your gap is significantly different from this, you have to remove the distributor, grid away the nubs that "locate" it, then reinstall and turn it manually to achieve the 0.020" gap, then tighten down the hold-down clamp.
Before you go through all this -- how's your oxygen sensor? When the O2 sensor on my '88 went bad, the first sign was an occasional soft, muffled "Pop" that sounded a bit like an intake backfire. It was actually unbruned fuel from an over-rich mix hitting the catalytic converter and exploding there. The O2 sensor is supposed to be changed at 75,000 to 80,000 mile intervals. If yours is close to that mileage -- or if you don't know -- I'd try a new O2 sensor.
