0 on the flywheel is TDC.
Remove the dizzie cap and turn the aux shaft till the rotor is lined up with no.1 notch in the body of the dizzie.
The notch on the inside of the cam sprocketshould be set to line up with the top of the rocker to head surface, where it sits on the head. That is, to line up with the actual rocker cover, not the head surface.
The adjuster should always be adjusted in a clockwise direction.
By the way, the cam belt doesn't have to be removed to do a Mk1 timing belt.
Good luck with it, and let us know how you get on with it.
Andrew
Par 6 Golf GTI. Coilovers, BBS CH Wheels, APR'd
Caddy van 05/07 (colourcoded) (BRIGHT! orange!) coilovers, Konis 18in. wheels, Oettinger tuned
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