Do you have a timing light? If so, I can tell you a much easier way to do it.
As for the directions, breaker points work by breaking (as the name implies) the primary coil circuit on the ground side. In other words, as long as the key switch and safety cutoff are on, the coils always have power from the battery, with the connection to ground being made/broken to get spark. So, the manual says to disconnect the wires from the points and use a test light to set the timing. You need a powered test light (the kind with batteries and when you touch the two probes together the bulb lights. I use the continuity tester on my meter that gives an audible signal) to connect to the points so that when they are closed, the light turns on, and when they break, the light goes out. You want the light to go out at the moment the "F" mark lines up with the timing pointer.
Now, the Dyna replaces the breaker points. So, with a powered test light connected to the ground and the blue wire on the Dyna S unit (not connected to the coils) we set the timing the same way. However, the Dyna needs battery power, so the red supply wire has to be connected with the key turned on for it to work.
When I set up my Dyna, I just connected everything, setup a strobe timing light and cranked the engine over with wit the key on the fuel shut off so the engine wouldn't start. The timing light would still flash and I could get the static timing set this way. Then, I'd fire it up and set the dynamic timing.
Hope this helps...