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Sounds like the spark plugs are not firing to burn the fuel. Check to make sure all spark plugs and wires are in good condition (not torn or have a bunch of "white stuff" the white stuff is from the plug wires grounding out on something metal and not delivering the electrical signal to the spark plug. Then follow the plug wires to the distributor and ensure all is clean and in good shape. You can also unlatch the distributor cap and clean the 8 metal contacts inside the cap. If it will start a easy thing to check is your timing. Need a timing light but if it is a 5.7L GM 350 small block I believe timing is 8 degrees from TDC (Top Dead Center) Good Luck
Replace spark plugs with new ones. put new muffler in. The muffler has an affect on the way engine runs. (back pressure) is needed. At this age you may need a head gasket(s). Compression check on all cylinders. The list goes on... Good luck
you shouldn't have sparks shooting out at anything,, so change that plug wire ,, ( recommend the whole set) the spark that should be going to the plug to fire and burn that fuel isn't happening,, so that cylinder is backfiring,, and it will "guppy" your muffler if it hasn't already, ( Guppy is expand it , so it looks like a Guppy stomach) do not run this motor until that spark problem is fixed,, It could cost you 10 times the price of a set of Plug wires
i would have it looked at. sounds like a blown head gasket. if so be careful when you start it. bump it a couple of times and see if it feels like it doesnt want to turn over. if you try to start it and the gaskets have leaked onto the piston it can blow the motor up.