"the notch on the timing gear is about an inch to the right of 0. It is my understanding that it should be right on 0."

If "timing gear" means crank pulley, and "to the right of 0" means *before* 0°, I think the dist rotor is misleading you—due to the 12° or so of advance setting, as Art said.

I would turn it till the crank pully mark is at 0°, check for "perky" cams (and cam drive sprocket 0° marks, then look at the rotor. Assuming 12° of initial advance, the center of the rotor should be about 5/16" PAST the t#1 tic mark on the dist body (because it WAS at 0° before everybody else.)
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Bruce Young
'93 940-NA (current) — 240s (one V8) — 140s — 122s — since '63.