That pin you are talking about is just to lock the flywheel so you can get the nut off. It serves no other purpose. You need to turn the crank until the points are at their widest opening, gap them to .018, clean with a dollar bill, and that is about it.
Some of them old dogs have a hole in the cover and flywheel so as you can insert a pin or small phillips head screwdriver or nail to lock the flywheel so the nut can be loosened. Some do not even have the access hole for such.
Do this if you do not have a Impact wrench to remove the flywheel nut. (but
do not use a impact wrench to tighten the nut when going back together.
To lock the flywheel take the muffler off and rotate the crank until the piston goes down and then insert a small cotton rope on top of the piston or take the spark plug out and do the same. In either case take out the spark plug because the rope will squish the gap together on the spark plug.
I just now noticed that you had the flywheel off before.
Constantly going back and removing and installing a flywheel due to trying to get old worn out points to operate is not a good thing especially if you are use the whacko method of flywheel removal. That is another good reason I suggested you install NEW points and condenser. I do not use the whack method (unless I'm working on Bro in Laws eq and he is not watching)
I use a puller on my own eq.
Them old 1-40, 1-50 series of Mac's
usually will only start cold if you tie the trigger throttle wide open with a solid copper wire and give em a prime of gas and with the chainsaw on the ground and give it sharp fast cranks with the kill switch ON. (leave the choke off if you have primed it through the carb throat or muffler. Just slide the copper wire down off the trigger when it starts and leave it dangling for next time. If it starts and runs for little while and dies prime it again and go. they are usually really cold natured and always want to start with a full throttle even when warmed up..
If it has the old cast muffler with the little holes I just prime through the muffler when the engine is cold. (if the breather cover is still on and has the carb covered)
If you have a ohmmeter or continunity light you can confirm that points are closing BEFORE you install the flywheel.
NEW points will need the paper cleaning method because a feeler gauge will add a skim of oil skum to the points and they will sometimes not make contact.