set to the higher end of the allowed tolerance, not more than that unless you like to replace the camshaft as maintenance item. As its an OHV engine, you need to mark the crank pulley to set the clearances correct as you cannot see when the cam comes on ramp for a cyl.
its a 4 cyl engine, very easy, just make one more mark on the pulley at 180 degrees opposite to the TDC mark,
tdc is cyl 1 (verify by dissy - so you accidently dont do it on exhaust stroke)
180 degrees is cyl 3
second time tdc is cyl4
second time tdc is cyl 2
dont use the distributor alone to see the engine order, Its adjustable and can throw off the cam position for tappet setting. (also make sure the pulley actually shows TDC1)