chaimv,
I've asked the same questions as you. If you click on my name and visit my past threads, you should have all your questions asked.
I didn't pull the distributor out but it shouldn't matter where you put it as long as it "fits" to the oil pump. Then you can proceed to time it with the flywheel mark and ball. Just remember that the flywheel mark will align on the ball at #1 and #6 cylinders during 1 rotation of the distributor rotor. Others can elaborate more here but they've done a good job at explaining the whole timing issue to me with an engine that ISN'T running. Good luck
Kyle