Do you think past memories in dreams can be distorted? I feel like a lot of things that happen resonate with me spiritually but something’s always off about it (i.e. it’s only a short moment in a wholly unrelated thing, someone i might’ve been with is portrayed as a friend in my current life, etc.)…

Absolutely. Dreams can be a spectrum of how much literal truth they hold. Sometimes you will have a dream that is a 1:1 a memory with all the details in place, and sometimes you will have a dream that is a memory but it is conveyed with symbolic dream logic, and random altered bits. Its definitely a mix.