Ok...stop and take a step back. FIRST you can't just stab the distributor in there, put the plugs in order, and point it at #1 and expect it will fire...The pointing the rotor at the #1 plug wire ONLY works if you have the motor at top dead center coming up from the compression stroke...I.E. The rotor is pointed at that plug terminal b/c it is supposed to FIRE that cylinder....the cylinder should fire upon completion of the compression stroke...with me?
SO. Pull the distributor OUT. Pull the number one plug OUT. Put your thumb over the hole. Have some one bump the key until it blows your thumb off the hole. Look down at your balancer. See the timing marks? Turn the motor over with a sock and ratchet and line them up to "ZERO" MAKING SURE you turn the motor clockwise....same direction it was turning when it blew your thumb off. Put your plug back in.
NOW. With the distributor in hand, put the cap on and find #1 (If its labeled on the cap...cool. if not..it really doesn't matter right now...as long as the plug wires will reach where they need to just Pick a terminal and call it #1. With the cap on, make a mark on the body of the distributor that lines up with #1. This mark is what we are going to put the rotor at. We put it on the body so you can see it AND the rotor at the same time and not "guessing" looking at with a cap on.
Stick the distributor in. You may have to **** with it to get it to seat fully into the oil pump and line up the rotor with our #1 mark (Off a tooth on the gear or turning the body a bit...as long as it is seated and mark lines up....pay attention to the harness and make sure it will reach. It really only falls in one way.)
Dizzy is in, harness connected, rotor is pointed at #1 and the motor is at TDC on the #1 cylinder....lock the bolt down on the dizzy enough that it will not let it free spin but with some effort you can adjust it by hand. Now...put your cap on and working from the #1 going clockwise, put the wires on in firing order. Attempt to fire. If it doesn't..turn it slightly counterclock wise and try again. Don't go TOO far. it doesn't take much at all to change the timing. Once its fired, using a timing light set your timing using the normal procedure. Hope that helps clear things up. Remember...you CAN NOT SKIP ANY OF THE ABOVE STEPS.