318 Distributor install question

Yes... I would follow the shop manual, as its stated on page 9-35, doing things correctly first handedly will insure you not second guessing yourself afterwards...

The fact is, the shop manual has no real well worded procedure. Also the gear orientation has nothing to do with compression stroke. it can be lined up on either no1 or no6 firing stroke, meaning, at TDC. There is also no really clear procedure on installing the distributor.