My experience with both my 104 head gasket replacements:

After cranking through several turns, the timing alignment holes were within about two fifths of a hole diameter of spec. Indexing the chain one tooth either way would have created a larger off spec condition. I attributed the very slightly off spec condition to chain stretch and gear wear. Also, if you had the head resurfaced, the distance between the cams and crank will be very slighlty reduced but this difference is probably not measurable.

Without a pressurized chain tensioner in place, there is a fair amount of slack in the chain. If you had to back off slightly to position the crank at TDC, some of this slack will be between the crank sprocket and the intake cam sprocket. From my limited experience, this slack can easily result in about a "half a hole" off spec condition. You can experiment with this by positioning the crank at TDC, and then using a wrench to very slightly turn the cams. This is what finally convinced me that I was on spec. If you do this, be careful not to wrench the cams to hard--you don't want to rotate the crank. Just turn enough to take up or create chain slack. Keep in mind that the position of the intake cam can change relative to the intake sprocket because of the advance/retard gear.......

Disclaimer: I am a hobbiest mechanic, not a professional technician..... The above is based on my (limited) experience. There are others on this board that have far more experience, If I have given any wrong information or advice, I hope they will comment......

J. M. van Swaay

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1994 E320 Wagon, 230,000 miles
1995 E320 Sedan, 106,000 miles
1994 E500 Sedan, 79,000 miles