Terry,
Pieman's right. It doesn't matter if the chain was removed from the crank and the crank rotated then the chain put back on. What matters is where the crank is in relation to the case reference. If it lines up, it is ok. Yes the cam turns at 1/2 the speed of the crank, that's why the cam sprocket is twice as big as the crank sprocket. The size of the teeth on the sprockets are the same though.
Looking at the 2nd picture again, I see that the reference marks aren't parallel with the head. It indeed looks like it is out a tooth. How did you tension the tensioner? Have you installed the cam chain guides properly?

Hold on a minute....I think I just spotted what you were trying to say. The cam sprocket does have twice the radius of the crank sprocket. Rather than trying to move the cam sprocket the 1/4 inch to fit the chain, move the chain the 1/8 inch on the crank sprocket to move the cam. Does that make sense?

Now I'm second guessing myself. Wish I had my engine apart to check myself.