I had the SAME problem. Way too much advance from the carb, under laod. During garage tuning, everything looked great, normal advace with RPM, starting at 12BTDC initial advance. All was swell.
BUT, under load, she knocked, especially at higher RPMS.
I have a theory. All Spark COntrol Valves (SCV) are NOT created equal. I had a Holley 1940 w/SCV that I installed to replace my Autolite 1100 w/SCV.
The dizzy was the same.
After years of restoration, she knocked like a banshee when you took again the the road.
Point Dwell error was partly to blame. (BTW Pertronix II has crappy dwell for the load-o's in my opinion.
After endless tinkering with initial advance to reduce knock (I was down to setting idle timing to 0 deg...TDC!!
That is NO way to run an engine.
I contemplated sealing the venturi port in the carb throat to let vacuum fall to near zero under load. THis is a bit power robbing when you want it most...but it is much better than knocking like I was getting. I was too afraid of the epoxy, or whatever plug, getting sucked into the intake if it dislogded.
I also looked at teh SCV to see if there was a way to plug the port in the SCV "chamber." No good method.
Knowing that my Clifford Holley converter will SOMEDAY arrive (hear me Clifford?), I planned to dump the Load-o-matic Dizzy soon. I decided to install the Duraspark Dizzy, even with the 1940's funky 2-way vacuum via the SCV.
I also learned that the load-o-matic dizzy is MUCH more sensitive to vacuum than conventional dizzys seem to be.
I had tried drilliling a small hole in the vacuum diaphram, tapping in a screw to adjust the maximum travel the diaphram could go, thus limiting total advance. It was a little better, but that also prevented full advance.
THe manuals for the 65-66 load-o-matic call for a maximum advance, from the dizzy, of 12-15 degrees, based on year and transmission configuration. Combining that with the initial 12 degrees BTDC called for on my car ('stang with C4), you should have a total advance of slightly less that 30 degrees. My experience is that alittle more advance is fine, so long as the car is not under load

35-40 degrees total advance can run well in some cases; As currently tuned, I'm getting about 35 degrees with no complaints
THe best solution? Duraspark!
THere are dozens of threads and posts espousing the best COMPATIBLE distributor for your 6 banger. Mallory makes a beautiful, highly tunable, dizzy for our ford 200's. It is over $400.00 though! My duraspark, with cap, rotor, wires, harnesses, coil, and dizzy was less than $100.
It works great, and the vacuum adnvance from teh carb makes little difference, though I have it hooked up. THe mech advance is the best way to get proper RPM based advance. The vacuum advance helps the car be much more efficient and clean burning in situations other than performance conditions. Who really cares about that?
On the other hand, with a "normal" (non-SCV) carburetor, the vacuum advance, in conjuntion with the mech advance, are designed to give you the best of both worlds, with the certainty of not having funky carburetor induced excess advance under load.
I posted how I did my Duraspark swap in the following thread, with links to how-to photos...very simple and TOTALLY WORTH THE TIME!!!
http://fordsix.com/forum/viewtopic.php?t=21002
Good luck!
Joe