setting the timing on 1.6D

I'v just rebuilt a 1.6D for my Golf and I'm having some trouble getting it set up right. I have the camshaft slot level and the injector pump pully set to the mark. The flywheel has a 'o' which I assume is TDC and a lug about an inch on each side. I set it up on the 'o' and it starts fine but smokes and seems to run better with the cold start pulles out all the way. Can Anyone Help?

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Hepburn
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