Hi Kevin,
The test of whether the valves are timed correctly is to turn the engine forwards - on the non-firing stroke the exhaust valve should just be shutting at TDC, and the inlet valve is just opening, or about to open in the next 10-15 degrees or so. When correct this is true for both cylinders.
If you don't have a degree disc, you can make do with a dress-maker's tape and a marker pen. Fit the flywheel. Mark TDC relative to a fixed point - vertical or a fixed wire pointer. Run the tape around the outside of the flywheel (360 degrees) and measure the circumference. Divide the circumference by 10, and mark this out out on the flywheel before and after TDC - this will be +/- 36 degrees. You can use the "36 degrees before TDC mark" to time the magneto (on full advance). You can use the 36 degrees after TDC mark to make sure that the inlets are not opening too late - they should be well opening by the time you get half way there - 18 degrees after TDC.)
OK - there's a problem with my instructions, which were to leave the half time pinion (gear) on the crankshaft (1), and to leave the gear on the camshaft (3). I had envisaged just taking taking out the intermediate gear (2), setting the engine to TDC, setting the cam so the valves are "rocking", then dropping the intermediate gear (2) into place. But I see the top of the oil pump shaft is in the way! Are you able to drop the oil pump out?
I assume in the factory the oil pump went in last!
If you can do that, my instructions should be OK.
Re the timing marks, when the engine is at TDC I assume one of the 180-degee marks on the half time pinion points directly towards the intermediate gear spindle, Mark A on the photo below lines up with it, Mark B then points directly at the camshaft, and the mark on the cam gear lines up with it. But, as in my opening comment, don't bet on it! Remember that the position of the intermediate gear is completely arbitrary - it will look good if the timing marks line up but the engine will run exactly the same regardless of where you throw it in. Even the number of teeth on it is unimportant! It is the position of the cam relative to the crank that is important, thus the importance of timing the engine.
Good luck. Be confident!
Cheers
Leon