[Baffler]

It has most probably bent a valve or two, as DingoV70 has alluded to, when it stripped the pulley key. You're probably just achieving clearance in its "out of time" state and is making contact with the bent valve when you set it up correctly. You've nothing to loose by removing the camshaft and lifters (noting their positions) to determine which valves are not seating properly but this will only confirm your suspicion. It's looking like head off time I'm afraid.

The small notch in the flywheel ring gear, lined up with the arrow/marker on the gearbox housing, is your TDC. All other slots/holes are for either tooling at time of manufacture, balance and or locking the flywheel at TDC via the aperture adjacent to the fuel pump with a suitable locking pin.

I assume you're using an endoscope down the injector or glowplug aperture to determine TDC? Either way all will become clear once you've removed the head.