You can smear the entire rod with grease to keep it from rusting, just a very light film, make it look "wet". There's no "lube" effect there because the rod only touches bushings on both ends, you're just protecting it from rust. What you're really lubing is those bushings in the cam ends. If you look at the outer one on each side, you'll see it has grooves cut on the I.D. Clean those out and fill them with grease. That will give the rod a reservoir of lube for many years to come. You probably only need to do this like every 5 to 10 years.
The locating pin is a little chrome pin sticking out the side of the rod. I can see it in your pic. You need that to properly locate the disc on the rod and lock it from spinning. This also locks in your timing correctly. Read through that link I posted a few posts back. That explains the correct install for proper timing. If you screw this up, you can throw your timing 180° off.
This advance rod servicing was never mentioned in any of the Yamaha service manuals. Granted, it doesn't need to be done very often but due to their age, all these bikes are ready for it now. I guess Yamaha didn't figure they'd be around this long, lol.