Following Cam's suggestions sound good to me. I get a little worried reading
"That would explain a lot, but I'm not sure how to solve it, when I crank the thing until rotor is pointing to #1 (about 300 degrees), timing mark is at 0 and #1 is at TDC. Maybe I do have the distributor gear wrong? I've checked it several times. How can I be 100% sure that it is right? it's a multi-stoke engine, so this align more than just once right?"
It looks from that as if you have the basic timing set at 0º and you're trying to start it using that setting. It has to be set to about 12º to 15º BTDC to get it running before fine tuning, if needed. With the front #1 piston at TDC (beware it can be 360º out) the pointer on the timing chest should point to 0º. Turn the engine so it does. Check the rotor position and turn the dizzy so it points to the notch in the rim of the dizzy body. If it points in the opposite direction the engine is 360º and needs another turn. All the timing is now at zero. Carefully turn the engine so the pointer is opposite about 12/15º. Going back to the dizzy you'll see that the rotor has moved round a bit. Twist the dizzy so the rotor points to the notch again. Do up the clamp nut. Spark to #1 plug should now fire at 12/15º BTDC. Check you have the proper cap with the proper notches to match the dizzy body. Cap should locate to put #1 lead at the same position as the notch on the dizzy. Refit the new and dry plugs. Refit plug leads. Dizzy rotates anti clockwise, firing order 1 - 3 - 4 - 2. Check all the other wires are on and secure. Pull out the choke, turn key and them let out a whoop when it fires up.................I hope. Probably lots of smoke from all the gas that's gone into the exhaust system.
Still no luck? Thinking caps on again guys!