318 LA Rotor position and TDC questions

Well, they certainly can be set at 6 and 12.... that is standard and perfectly fine to do. The mistake is thinking that #1 is ready to fire there..... not true. It is #6 ready to fire in that situation. #1 would be ready to fire one full turn of the crankshaft later and the dots would then be at 12 and 12. After another full crank rotation, the dots would be at 6 and 12 again and #6 ready to fire.... and on and on. Tis is because #1 and #6 move up and down in tandem and reach TDC exactly together at all times, and they 'take turns' firing on each crank rotation.

Once you moved the crank, you have to get it back to 0 on the ignition timing marks and determine if you are at #1 or #6 ready to fire. I do that by removing the left valve cover and looking at the #1 intake and exhaust valves while moving the crank back and forth a bit. If both #1 valves move as you turn the crank back and forth around the 0 timing mark, then #6 is ready to fire. If the #1 valves are not moving at all, then #1 is ready to fire.

OK on the milling....just asking as that can effect the intake seating properly. We'll just have to run with the assumption they were not milled for now.

It may be best for you to do a search and read several threads on intake gasketing and sealing. It has been discussed and described ad nauseum here.