The correct way is to align the timing marks on the front gear with the camshaft gear but that is pretty hard to do without having the front cover removed from the engine. As long as you are not using a magneto the marks do not have to be aligned correctly since the distributor gear can compensate for any difference.
For a distributor just assemble the gear and housing to the front cover. Turn the engine until the number one cylinder is at Top Dead Center on the compression stroke. Mark the distributor housing so you can see where the number one plug wire tower is located. Remove the distributor cap and turn the rotor until it points to the mark that you made and install the distributor onto the adapter housing on the engine. Rotate the distributor clockwise until the the mark is below where the rotor is pointing. While watching the points, slowly turn the distributor CCW, bringing your mark back up, until the breaker points just start to open. That should get you close enough for the engine to start. You can fine tune the timing after you get the engine running.
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