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It was floating but staying far enough in it's safe window not to touch, of course - just like in a timing belt job, you totally shouldn't let the cam jump off the springs, but if it does, go strait back and you'll be fine.
You had compression because as long as the valves close low and don't open high, and had not gotten bent yet, you can actually end up with plenty, even too much, with a motor totally out of time and internally badly fuckered (as you found)
Other shop also assumed time was right because of compression or crank quality, and just went to the distributor.
Of course, you might mention to the customer that they want a real tear down or a different motor, if that one has mystery poorly installed performance parts sprinkled all throughout.
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