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In the timing specs it should give a figure in thousands of an inch BTDC for timing the engine. Put the dial indicator in the mag side sparkplug hole, find TDC and zero indicator gauge, then rotate the engine backwards a bit then forward until you get the proper thousands of an inch BTDC indication on the gauge. The marks on the flywheel and housing should line up at that point. Rotate the stator and tighten. If you have a timing light made for 2 strokes then you can use it to check the timing at the operating rpm. Most automotive timing lights are incapable of flashing at the ignition pulse speed found in 2 strokes.
So you adjust the Stator before you check the timing with the light ???
Do you just use the dial indicator to verify that the timing marks on the flywheel are in the right place ?