I believe I have figured it out. The culprit was the springs inside the cap.
So from the beginning:After I first noticed #4 was arcing, I bought 2 caps from Vintage750, replaced #1 and #4, and then noticed #4 was still arcing. I bought new DR8ES-L spark plugs and a kit from 4into1 (4 caps, 8ft of 7mm HT cord, 2 coils).
Used the new coils, cords, caps, and plugs, and now #2 and #3 were arcing. Total resistance per coil from plug-to-plug was almost 30K Ohms so I decided I wanted to reuse the OEM coils and remove the resistors from the caps to reduce total resistance.
OEM coils - 11.9-12.1K Ohms
Aftermarket coils - 13.6-14.0K Ohms
I noticed that out of my 6 new caps, 3 of them had different internals; 3 caps had 1 long spring and the other 3 caps had 2 springs. While replacing the resistors with brass, I elected to use only the long springs except for #3.
Total resistance is now 22-22.2K Ohms per coil, plug-to-plug. I fired it up today, no arcing on #1, #2, #4, and a faint arc coming from #3. For cap #3, I removed 1 of the springs and put in a longer piece of brass. No more arcing.
I don't think changing the total resistance would've fixed anything but I believe that extra spring was causing my problem. Maybe the way it was making contact with the other spring, I'm not sure. Where they sit in the cap aligns with where the arcing was happening so I'll take it. I provided some pictures to showcase the difference between OEM resistor vs. aftermarket resistor, as well as the internals difference (replace my brass screw piece with the aftermarket resistor).
I'll keep an eye on it while I finish the rest of my repairs but thanks again to everybody who provided assistance in trying to solve this problem.
