1995 VW Golf

My daughter owns a 95 Golf. Recently she has been experiencing problems with the emissions light coming on. When it does you can feel a drop in power and then it clears up and runs fine. I took it to a dealer and for $159 ($69 diagnostic, 2hrs ($45) to find the problem) he told me (didn't fix it) that the problem was the distributor. A new distributor cost $215 of course. We had the timing belt replaced when she bought the car. It had close to 150k miles when she got it. Anyway they are claiming that one of the 'pins'(?) on the distributor is missing causing the distributor to move throwing the timing off causing the car to run bad. But it seems to correct itself (curious). Although the car did run better after I left, I plan on going back to ask him to show me what 'pins' he is refering to. I thought like all cars you had to rotate the distributor to set the timing. I totally respect the shop that did the work and know they do quality work. Is the dealer blowing smoke up my #!$% or not?