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I'm a novice but are you sure No1 is TDC on compression reads as though its No4 just rotate the crank another turn as cam rotates at half crank speed?Sorry if you have eliminated this possibility.
It's more a foible of the manual description and giving different information for two different tasks than anything wrong.To set the cam originally (installation) you do as you've done with mark lining across am carrier split, and notch at 12 o'clock. The notch is not visible for setting tappet clearance with cover on and so not really significant. Buuuuut, setting it like you are now with it all visible, put the camshaft notch at the bottom 6 o'clock and it will then conform to the schematic of which valves to set clearances at.You've not got anything wrong, just how some things are explained in the text.