>>Using this system, once I find TDC, how do I know where 7.5BTDC is?

Jonny,

You can figure it out.  The stock VW steel pulley has an outer diameter of
    <--
6.995" -- 7" for the arithimetically challenged :-)..........
                           <--
There are 360 degrees in a circle and in this case the circle is 21.975"
around so we just divide 360 into 21.975 and we'll get about .06104" inches
per degree.  Multiply that by seven and a half and you've got .4578".  Round
that to .46" or about 29/64ths of an inch. 

========

I looked through my stack of crank pulleys when assembling a motor while I
was hunting for a stock 25hp style pulley.  There are different diameters.
The ones that came with the 36hp are larger, but even in the 40hp/1600s there
is a variety of sizes.   I would measure your own pulley before figuring
where the timing mark is using this method.

PS I used the larger later style pulley (stronger) I had for the motor for
the 61 to get maximum cooling air.