Looks like you are off by one tooth.
Your picture shows you are using the correct TDC marks on the rotor. That's good.
So with that mark lined up and the cam chain tight on the front side rotate the cam one tooth so your notch mark is at the 12:00 o'clock position. On the opposite side at the 9:00 o'clock position you should see the punch mark in the sprocket aligned with the gasket surface of the head.
If your head is not seating enough because the head bolts are not tight, which you can't do until you put the top portion of the head on, you can rig up some spacers, like a socket, on the head studs and gently tighten down the lower portion of the head just so you remove a bit of the space between the cylinder and head. Normally not needed but if you are concerned, try that.
Punch mark in picture is there at the 9:00 o'clock position, near end of cam is the right end or Advance unit end with pin hole for advance unit alignment, far end is the points end or left end of cam with notch for points.
Viewed from the right end, when the alignment pin and points notch are in the up 12:00 o'clock position and the sprocket punch mark
is at the 9:00 o'clock position and aligned with the gasket surface, cam chain tight on the front side, TDC mark aligned, you will have the cam timed properly. This is another way to crudely verify that the cam sprocket is at least close to being installed on the cam properly. If it was ever removed, dial gauges and degree wheels are the only true measure of accuracy.
When done, rotate the engine slowly one full turn on the crank, re-align the TDC mark, and re-check your marks.
NO NO NO, you can't put the engine together unless this issue is fixed.
Hope this helps.