soybeanjoe described the mark very well for static timing. The first mark on the pulley reach that indicator will have #1 at TDC. It can't hurt to pull your plug on #1 as you bring the motor around to line it up, just to make sure it's at the top of the compression stroke and not the exhaust, and that your rotor is pointing somewhere near the tower for the #1 plug wire.
With a magneto you set everything up on that mark, and there's nothing really to adjust from that point. They are at full advance (35 degrees) any time they are running.
You can use that same point for static timing a battery distributor.
Those are crankshaft degrees so they need to be mesaured on the pulley. At cranking speeds, if you can keep the fuel shut off so that it doesn't start and run, you should be able to check with the existing mark, essentially just verifying the static timing that you might have done with a test light or sparking the plug or coil wire.
The trick is I'm not sure there is any mark on the pulley for either the 40 or 34 positions (I don't *think* there are), so to check your running timing with a light you'd need to find a reasonably accurate way of measuring to establish them (40* would be 1/9 of the circumference of the pulley in advance of the notch used for static timing.) If you can't make those other marks exactly, do your best to establish the 40 degree mark. Then you can at least check that your advance is working properly if a) the motor is somewhere near your new mark at 800 rpm and, b) that it retards slightly, slipping back to your imaginary 34-degree mark when you cut back to 600 rpm.
Hope that helps.
I don't know the M well enough to help with what good numbers for compression would be, which will vary according to what you have for pistons and head. All I can offer is the rule of thumb that it should be fairly consistent across all four cylinders -- if there is no more than 10% variance between your highest reading and your lowest, things are wearing evenly. From there, it's just a matter of deciding if the overall compression is up to snuff. I expect somebody will be along with numbers to help you evaluate that.
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