There should be a tick mark on the edge of the distributor body that you can see with the cap removed. When #1 is at TDC the rotor should be centered on this mark, if not loosen the distributor and turn the body until the rotor and mark are aligned. The Germans put little timing marks all over these engines - cams, balancer, distributor. Reminds me a little of the Detroits and their timing gears, every gear is marked, align all the marks and your good to go. Aligning the distributor this way should have you just about right and the computer will do the rest.
'73 280SEL 4.5 (9/72)- RIP
Only 8,173 units built from 5/71 thru 11/72
'02 CLK320 Cabriolet - wifey's mid-life crisis
2012 VW Jetta Sportwagon TDI...at least its a diesel
Non illegitemae carborundum.