The following is based on the '79 thru '83 manual but should still be good for '78.
>Does anyone know how to set the
> timing(crankshaft sprocket, vs. camshaft
> sprocket, vs. no 1 TDC, vs. distributor
> alignment).
After you have the camshaft and crankshaft in time you make sure number one is at TDC (with both valves closed) and then install your distributor so that the rotor is pointing pretty much to the number one terminal on the cap. When the ignition timing is set correctly, with the number one cylinder at TDC and looking from front to back, the rotor should be real close to the 5 o'clock position and the number one terminal on the cap should be real close to the 6 o'clock position. This is because the rotation is CCW and the timing is advanced slightly when properly set.
>Do you line up dots, arrows,
> notches?
There should be marks on the chain, camshaft sprocket and crankshaft sprocket. With the number one piston at TDC You line up the marks on the chain with the corresponding marks on the crankshaft sprocket and camshaft sprockets. It's also important that the camshaft sprocket is positioned properly on the camshaft so if you have removed it be sure you get it back on with the camshaft dowel in the number one sprocket hole.
Also is it possible for the chain
> to jump a tooth(or teeth)?
Yes. Especially in older engines the chain can stretch and jump a tooth or teeth.
Hope this helps.
Bob A.