Have any particulars on your combination? As you mention, your combination may be marginal for pump gas.
Your basic ignition timing adjustments should be made with the vacuum advance unhooked. Using a dial back timing light can also be a problem as many of these vary in the timing readings they put out. The older MSD instruction sheets use to be specific in what timing lights were recommended for ignition timing adjustments and there were no dial back timing lights on that list.
When you say you have 39° timing at 2500 rpms, does this mean that all the timing is in at 2500 rpms or that’s just where you’re setting the total? If the timing is continuing to increase after 2500 rpms, then the total timing ideally needs to be set at an rpm point just above where the mechanical advance in the distributor is pegged out. But that brings up another point. Previous experience has shown that having the total timing in at 2500 rpms is likely too low. For the EMC engine, I found that a lazy curve with the total timing coming in at 3400 rpms made more power in that particular instance.
I had a stroker Y on the dyno yesterday that had been simply timed with the initial settings and raced that way. It has a stock distributor with an electronic conversion. The total timing on that engine came in at 4700 rpms and was 26°. Made 274 HP. Kept bumping up the timing in increments and with each increase was rewarded with a HP increase. The same engine was making 306 HP at 38° total and this is a pump gas engine. The only problem is increasing the timing also leans the fuel mixture and in this particular case, the engine has a 3X2 setup with the Holley 94’s. The jetting was already on the lean side before adding additional advance to the ignition. There’s an easy 15-20 HP left on the table in this instance by not jetting the engine up fatter. Because a single four intake and Holley carb will be on the engine when it leaves the shop Monday, there was no time wasted in tinkering with the jetting on the 3X2 setup.

Lorena, Texas (South of Waco)