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For timing, does it matter which cylinder is to the top. I am wondering about the position needed when changing points on the flat 8. Please help!

it does not matter which piston is up when setting poins gap,

The distributor shaft has lobes on it which open the points. So when you set the points you want to make sure that the points are setting on one of the high lobes of the distributor shaft. Once you put the points in and the high lobe on the point where the points are in contact with the shaft there is an adjustment screw that you turn to set the points to the proper gap using a feller gage the gap setting is .017

Dan is describing the dwell adjustment, which should be performed first. To adjust the timing you loosen the bolt at the base of the distributor and turn the distributor while watching a timing light that is aimed at the timing marks on the vibration damper (the large pulley at the bottom-front of the engine). It is important to keep the rpms below the point of centrifugal advance (usually around 500-600 rpm), or your adjustments will be in error.

tthe question was confusing because it started out about timing and then went to changing points

If you are changing the points you need to

a) change the points--remove the old set, install the new, and "bump" the starter until the points are fully open on one of the high cam lobes of the distributor. That is where you:

b) Set the dwell--by using the proper feeler gauge to adjust the point gap to the correct specified distance by means of the adjustments built into the new set of points

c) Set the timing--the final step in replacing points (plugs,cap and rotor are usually changed at this time too)

When adjusting the timing on most engines, you should disconnect the vacuum advance line from distributor.