Put the cap on it, #1 will be marked on the cap. Mark it on the dizzy housing. Line the rotor up with the cylinder to the left of that ( looking from the top) and take a stab at it. It will rotate as it goes down and should end up pointing at #1 when its fully seated. Just because you have the engine at TDC doesnt mean you are on the compression stroke, you could be 180 degrees off. Did it blow compression out of the spark plug hole right before it got there?
I'm not 100% sure if it did or not.. It had a small pressure release but it was very small. I'll take the engine all the way around a time or two and see about it.
A tip - instead of stabbing it a tdc on the compression stroke, try rotating it until the pointer is actually pointing at where you'd like the timing to be -- 10, 12, 14 degrees btdc. Then follow Jerry's instructions on stabbing so the rotor ends up pointing at the number one cylinder plug wire. That'll have it even closer to the correct timing when you fire it.
Putting the distributor back in is fairly simple. Pull #1 sparkplug, put your finger in the sparkplug hole, crank the engine until you feel compression. Then line up the TDC mark on the balancer with the pointer on the engine block. Align the distributor rotor up with the #1 position marked on the cap, slide the distributor down into the block, (you may have to wiggle the rotor slightly to get the gear to engage) and then note where the rotor is pointing. If it still lines up with #1 position on the cap, install the clamp and bolt. If not, pull it out and turn 1 tooth forwards or backwards and try again. Put the #1 spark plug back in and tighten it down, put the clamp on the distributor, but don't tighten it too much, as you will have to move the distributor to set the timing. Note that if it doesn't align perfectly with #1 position, you can turn the distributor until it does. The only problem is that if you are too far one way or the other, you can't turn the distributor enough to get the 10-14 degree optimum timing range.
At this point hook up all the wires, get out the timing light and start the engine. Set the timing where your car runs best. Don't forget to disconnect the SPOUT jumper connector when you set the timing, and plug it back in when you finish.