Charles,
You seem to be doing the drip tube method the right way. As you approach the timing mark, fuel will flow from the overflow tube. When you reach the timing point, fuel flow will abrubtly stop. One drop should follow after about 3 seconds. Swivel the pump to get the correct timing.
This drip tube method is much more accurate than the ones posted above, and just about as easy. Set your timing by this method and you will never have to worry about the timing on your diesel. I have used this method on the many many MB diesel engines I have rebuilt. One thing that made it easier for me was that the engine was out of the car. Put the engine in the car, fill up the fuel filters and lines and start the engine. No need to bleed the lines. they are self-bleeding. That's what the rubber lines from nozzle to nozzle do. They Bleed the system.
Bill Lewallen Lexington, Ky. Where diesels purr and turbos whirr..