You can do either and TDC is not an indication of when no1 is ready to fire. No1 ALSO needs to be on the compression stroke
You can do the factory alignment of the cam gear but that MAY not straighten out the dist as some drive tangs are not the same as others
How to set this up: Pull the no1 plug. Stick your finger in the hole. Bump or wrench the engine until you START to feel compression. Now watch the timing marks and rotate the engine up NOT to TDC but rather WHERE YOU WANT the timing IE 10BTC, whatever
Now drop in the dist and see what you "get." Personally I would not mess with distributor drive gear alignment. Just put the dist in.
Now rotate the dist CW (small block) which is RETARD. Slowly rotate it back CCW (advance) until the reluctor is centered in the pickup coil. If this is a breaker points dist, rotate CCW until the points just open using a light or continuity checker
Now plug the no1 wire in WHEREVER the rotor is pointing, and start the engine
