Hi Paul,
Sorry for my ignorance, but I don't know which engine your Uno has? I think there were at least seven engines in use
Personally, I like clean engines, so I think you still did the right thing.
It's a bit hard to reconcile a knocking noise with the distributor! The only possibility is if the cap is dislodged (in which case, the engine usually won't run), or maybe the centrifugal advance springs have fallen off, which would be just weird.
Sometimes noises 'travel', and it's hard to really know where it's coming from. Try using a big screwdriver, handle pressed to the ear, to listen to items such as the water pump, generator, and the distributor, just to see if it's certain to be the distributor.
Just check also that the sound doesn't alter with the clutch disengaged - silly I know, but FIAT gearboxes can make all sorts of deep-seated rackets with the engine idling, and in the theoretical situation that water was forced into the gearbox through the top-mounted breather, I can imagine that it may dilute the oil and accentuate the 'normal' noise. I may be far off the trail with this one.
My guess is that it will be a coincidental failure of the water pump bearing. But I think you need to analyse the 'knock' in terms of what size parts would be required to produce it. I would expect more of a clicking/tapping from the distributor... if you're still certain, why not get hold of a spare distributor and swap it over - shouldn't be too expensive, particularly if bought without the (failure-prone) electronic module and vacuum advance.
Thanks,
-Alex