A D.C. police officer honored as a hero two years ago for shooting and killing a small-time heroin dealer in the culmination of one of the city's largest manhunts was arrested yesterday and charged with distributing heroin.

Officer Adrian M. James, 27, who was arrested at D.C. police headquarters, was one of three officers who received medals for their role in a shoot-out with drug dealer Bruce Wazon Griffith.

Griffith became the object of a three-day search Feb. 11, 1980, after he allegedly shot and killed officer Arthur P. Snyder on 14th Street NW. The officer had tried to arrest Griffith on a drug charge.

Officer James was arrested shortly after noon yesterday by the police internal affairs unit, which investigates allegations of wrongdoing against police officers.

James was assigned to the 5th District but had been detailed in recent months to the 85-member repeat offenders unit. The unit, described as including some of the city's most experienced officers, was established with widespread publicity five months ago to seek out and arrest chronic criminal offenders.

Full circumstances of James' arrest could not be learned yesterday. However, he had been under investigation for about a month or more, according to one police source.

Two days after Snyder was shot, James and another officer received permission to wear civilian clothes and begin an intensive search for Griffith. They spotted him that day and chased him, but lost him.

The next day they continued their search, and while cruising spotted him getting into a cab near First and S streets NW. They followed, joined by a third officer.

When the pursuit became evident, the taxi driver jumped out of the cab, and Griffith began firing a gun through the rear window. The officers took cover and returned fire. Griffith then jumped from the cab and, according to police, continued shooting. He was struck by as many as five police bullets and fell, fatally wounded.

In October 1980, James and the two others received silver medals at the annual Heroes Luncheon of the Board of Trade.

A police report recommending the three cited them for performance "above and beyond the call of duty."