Sand more paint off and put the transducer's ground alligator clip on the line. The piezo clamp's location is fine, but the ground clip needs to be on the line pretty near to the clamp, and not to a jumper to the battery negative.
The reason why is that clamp creates a small voltage spike when the injector line pressurizes and expands. The timing unit reads that spike. My feeling is that the reason you're having issues is the unit cannot accurately read that small spike with all of the electrical background noise with the alligator clip on the battery negative. Put it on a clean spot on the line, near the clamp, and your issues will likely go away.
I believe the injector clamp alone is what determines the rpm, so if you're having issues with rpm jumping around it's likely that clamp or the ground for it. The unit will use the clamp's pulse to flash the timing light and give you an rpm. Or it will use the pulse and the balancer gap to give you the rpm w/ a degree reading on the unit.