Hi Kevin,
You've not cocked up, removing the circlip is the right way to go. Then remove the washer and the rubber O ring. The star wheel can sick a bit, it could be a bit rusty. Be really careful, my mates star wheel fell to pieces when we gave is just a small amount of stick! (One of the stars points fell off, I had to build it up with weld and file it back into shape as a temporary bodge...not easy!)
All that play will be due to stretched springs.

Or it will be because the advance retard mechanism has fallen apart. This can happen it the little plastic clip at the top of the shaft that lives under the rotor arm has bust.
You don't need to remove the gear at the other end of the shaft unless you want to get the shaft out of the dizzy. If you want to do this then support the dizzy and gear on soft wood then knock out the roll pin with a drift. You MUST put the gear back on the same way that it came off otherwise its likely that you will crack it when you tap the pin back in.
I've done some more work on my dizzy recently, my 4.6 is running better now than it ever has. I also did the mods to a 3.5 and that runs better to.
Basically, I'm now running 12 degrees static 32 all in (but I might back this off a bit when I get the thing on a RR)
The main changes are that I now run one silver spring and one copper coloured spring. (Real Steel spring kit). The mechanical advance is all in at round 3K, maybe a shade less. I also don't run the vac advance at all.
This has made the pickup much smoother. I still get good BHP and MPG because the mechanical is kicking in sooner.
I bet running no vac will create a big "bun fight" on the forum!
My mates 3.5 runs the same setup but 14 static, 36 all in.
Also I've helped a chap out with a 3.9 and a twin points (spit) mallory system. The vac was kicking in about 45 degrees total advance and nearly causing the engine to spin in the opposite direction!
Anyway his mechanical was all in at 2800, he now runs 14 static 34 total and no vac and is very happy with the setup. (he's converting it to electronic soon). I've heard that the mallory vac is adjustable so he might be able to restrict it if he wants to connect it back up.
Pete