Sounds like the belt teeth are stripped down at the crank gear, that's why the belt looks OK up top but won't turn the cam. With the cam gear dot lined up with the mark on the cover, both valves in No.1 cyl are closed, but you don't know where the No.1 piston is, since the crank and cam are no longer phased properly. Without that knowledge, the rope trick can be hit-or-miss. Here's a procedure:

-Remove all spark plugs. Cut through the T-belt and remove it from the cam sprocket.
-Turn the cam so the sprocket dot aligns with the mark on the rear cover. Both valves are now closed in No.1.
-Using a drinking straw through the No.1 plug hole, probe for the top of the piston while turning the crank, and find the max upward position of the piston stroke. Skip this if you can see the crank indexing mark and can thus find top centre that way.
-Rotate the crank clockwise (CW) until the straw/piston drops about 1.5-2 inches.
-Pack as much rope as will go into the spark plug hole of No.1, while leaving enough length outside to grab onto for removal later.
-Now remove the crank damper bolt. Turning it CCW to loosen will compress the rope and stop the piston, locking the crankshaft.
-Replace all the oil seals, clean any oil from the belt sprockets and install your new T-belt...good info here:
http://www.brickboard.com/FAQ/700-900/EngineSealsBeltsVent.htm#Timing_Belt_Seals_Tensioner_PM

(note that your seals may have failed because of a clogged crankcase breather system and/or flame trap)

-Rotate the crank CW a little to take the pressure off the rope and remove it, then rotate the crank CW about two turns until the cam sprocket dot lines up with its mark and check that other timing marks are in proper alignment.
-if OK, at this point No.1 is max upward (top dead centre), now turn CCW to get the piston down again 1.5-2 inches.
-reinsert/pack the rope and tighten crank bolt. Remove rope.

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Bob: son's XC70, dtr's '94-940, my 81GL, 83-DL, 89-745(V8) and 98-S90. Also 77-MGB and some old motorcycles.