Actually, you should be at 1/4" past top dead center when you do the valve adjustment. Easiest way is to stick a screwdriver (be careful to rest it LIGHTLY on the piston head, no gouging) or even better a wooden dowel through the spark plug hole. Turn the flywheel clockwise by hand until the piston gets to its highest point in the cylinder, letting the screwdriver or dowel ride on top of the piston to show you where it's at. Watch the screwdriver and keep rotating until it drops 1/4" past TDC. That's where you do the setting.
Something else I should mention is that you have two top dead centers on different strokes. Watch your valve rocker arms as you do this. You want to be 1/4" past TDC on the stroke where both valves are closed, not where one is open. Makes sure you do the adjustment on a cold engine.
Hope this helps!
Here's a link with more information that may be helpful. Scroll down to the bottom of the page and it also links to pictures showing what to do...
That's exactly correct. Just make sure you keep turning the flywheel clockwise from above. Don't back it up or the tolerances between parts in the engine will throw your adjustment off slightly. If you go too far, go all the way around again twice to get back on the proper stroke.
It doesn't matter which one you adjust first, so long as both get adjusted. The exhaust valve is on the bottom. And just to verify the settings are:
Intake - .003"/.005"Exhaust - .005"/.007"
Shoot for the middle of the spec, .004" in the intake, and .006" on the exhaust, since everyone's feeler gauge use is slightly different. That gives you the most wiggle room.
Also, keep rechecking the valve as you tighten the adjuster. It tends to shift as you tighten, so sometimes it takes a few tries to get it where you want it.
Let me know if anything isn't clear.