To set the ignition timing of a RD400 (with point ignition), you need to see them as two separate ignitions. First set the left side and when one side is set correctly, then set the other side. Before setting the timing, you have to clean the surface of the contactpoints, so that no burning spots are visable (at least as less as possible) or install new points and clean them with some alcohol, so that no dust or other stuff is between the surfaces. (to prevent burning in)
First thing to do, is to set the distance between the points (point gap). You can do it with a feeler gauge with a thickness of 0,3 - 0,4 mm (I always use the one between, 0,35 mm). Looking at the camshaft turn the crankshaft with a ring spanner until the points you are adjusting (for example the left one) are fully open. (the top of the camshaft is where the points are fully open). The point gap must be between 0,3-0,4 mm (0.012 ~ 0.016 in). The feeler gauge must go slightly between the points, you must feel a little bit of resistance. Set the first contactbreaker point until the height is between the measures and then set the other one. (always check again after tighten the points)
This was the easy part.. now it's time to set the ignition timing.
The trick is to create a spark at excactly 2,3 mm before top dead center (BTDC) This can be done with a dial gauge (Figure 1), or with the end of a marking gauge. I always use a dial gauge like in figure 1 (the left one). It can be places instead of the spark plugs. First thing to do is to set the timing for one side. The points with the orange wire is the left cylinder. The Grey wire is for the right cylinder.
Figure 1: Dial Guage
Now rotate the crankshaft clockwise until the piston for which you want to set the timing until it is at top position. Now secure the dial gauge. Rotate the crankshaf (about a quarter) counter clockwise.
Set the dial guage at 2,3 mm and turn the crankshaf clockwise until it touches the piston.
At this position the contact points are about to open. (so before 2,3 mm at top position the contact points must be closed)
To check if it is the right timing, connect a 12V light between ground and the contactpoints (where the wires are connected) with ignition switch set to ON) or use a Voltage meter.
When the points are closed the light must be off. When the piston is touching the dial guage, the light must go ON.
You can adjust the timing by turning the base plate (where the points are attached on) to the left or right.. An indication are the marks on the statorhousing and rotor (dynamo). This is on the right side of the points (there is a hole where you can see the rotor). When the mark on the statorhousing is in line with the mark on the rotor, than you are very close. (Remember that the marks are just an indication)
Lock everything and check the timing again and adjust if necessary. (the base plate can move while tighten every screw...)
Then do the same thing for the other side.
Also check the spark plug gap. It must be between 0,6 ~ 0,7 mm (0.02 ~ 0.03 in)