Battling overheating new 360 build

I've always tuned for max timing advance until detonation, then backed off. Once I find peak timing, I adjust the rest of the curve for best performance. I've never had cooling issued like this though. I find that a lot of people simply set peak timing for a generic number regardless of their setup and call it good, which leaves power on the table.
Same.
38 is still a lot, not that it isnt the right setting for your motor. I believe your system isnt holding the necessary pressure is where I was steering you. Bad/weak cap can give this scenario. Best of luck!