One important detail left out from FGT's timing drill.You must be sure that #1 is on the COMPRESSION stroke---so the old finger in the plug hole trick as you are turning it to the mark.When it is blowing your finger out stop on TC that time.Another way is when the rocker cover is off is to look at the rocker position of #1 or #6--if both valves of a cylinder are closed when on TC that cyl is in the firing position.
Pull all the wires out of the cap.With #1 on TC of the firing stroke, put the dist in with the body oriented near where you want it,lift it enough to allow the shaft to be rotated to where you want it.Lower the dist into the hole keeping in mind that the shaft will turn a little as it engages the gear and you may have to turn the oil pump shaft slot a little before the dist will go fully down.If you still like the shaft/body position turn the body opposite shaft rotation direction to where the points just open or if no points to where the peaks on the dist reluctor (rotating part of the pickup) align with the peaks on the stationary part of the pickup.Tighten the hold down clamp snug but not tight.Find the wire hole in the cap that most nearly aligns with the rotor, it won't be perfect because it advances when the increasing engine speed advances the spark.That is #1 position so the others can be installed from this reference.
When installed carefully this way the timing will within 3 deg of TC.
The marks on the timing tab represent 2 deg increments.
It sounds like your timing is good enough to run or it wouldn't have started so well when bottle fed but yes I would move the shaft a tooth or 2 to get the dist in factory position but this is only critical on 55 and 56 265 engines which will cut off the oil to 1 bank of lifters and rockers if the dist body is positioned drastically different than having the vacuum advance chamber point over the right rocker cover lower front corner.
Changes in 57 made this not a factor.
