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The rotor is fixed to the star wheel, yes. The part that moves is the 4 spokes (the ones that stick up from the bottom). As the spark advances, the 4 spokes move around, so when the spokes and the star wheel line up, the rotor isn't pointing to the spark plug wire tower any more.
This is really hard to describe in words.
It's really common for the advance mechanism to rust in the fully advanced position. Apparently the mechanism guts crusty, then jams full advanced while driving, then rusts stiff. Replacing the whole thing wouldn't be a bad idea anyway.