ball peen hammer? Thats quite different than your original description.. Sounds more like preignition (pinging).
Check your points timing.. If thats OK then maybe the compression ratio was jacked up with these mods.
Also put a brand new plug in there and do a plug chop.. but be careful. If it's preignition you can hole that piston in a hurry.
Maybe that piston is hitting the head.. Do a clearance check. Remove the plug and put a piece of thin soft solder in there. Turn the crank over, past TDC, remove the solder and measure it where it's flattened out.. should be at least about 0.5mm thick.
Whatever the hell it is, find it and fix it.. All of a sudden this sound don't sound good at all.