that is exactly where my problem was and you were spot on thank you...

OK, we will assume the distributor wiring harness to be good, but if you have not seen the shielding layer.....you have not inspected far enough away from the distributor yet.
And the damage to the wires does not come from pinching. The wires break due to the EXTREME vibration harmonics of the 4Y engine.
Regarding the check engine light flashing:
The light you refer to....upper right corner of instrument monitor panel.......is this correct?
That light is controlled by the ECU and under normal conditions (when engine is running) the light is either ON or OFF.
I have discussed your present problem with a friend and he told me that he once had a 7F that was having some dash light issues and that he finally found a broken ground wire that attaches to the left frame sidewall near where the horn mounts. He says it is where several ground wires are fastened to the frame, so you might want to look at that.

Thanks for the quick response. I actually had looked at this prior ( the wire being broken in the pigtail ) and this was actually taken care of by toyota before our shop had opened. I actually had read at some point there was a TSB about how the wires were getting pinched behind the distributor and i see what they did. The connector was taken out and was rewired, I can not see where the sheilding wire use to be though. The ground on the cylinder head is great and no broken wires to be found.

Check for a broken ground wire on the left side of cylinder head adjacent to #3 cyl. If no broken wire there check for a broken wire in the pigtail leading to the distributor. The distributor has 2 wires inside a braided shielding jacket. 1 wire is distributor hot feed, the other wire is tachometer signal to ECU (controller).
The fact that the slow lock solenoid is de-energizing after the engine dies only shows that it is working according to design.
The slow lock is the idle fuel cut off valve that stops fuel from escaping if the ignition switch is on while the engine is not running. So, that part of your observance is not part of the running problem.
I have found conditions similar to yours on 7F models that were caused by either of the 2 items I mentioned.
If it turns out to be a broken distributor wire (either one) be careful that you don't get any of the shielding braid into contact with your splice repair or you will end up with a no run condition worse than now.