How would I set that up? I've read some people put the magnetic base on the oil pan, turn the motor over and check the surface of the flywheel... is that correct?
No, no, the flywheel mount you've shown is used for both measurements. First as you have shown, you are measuring the position of the transmission mount "candle holder" hole. Second, you measure that the face of where the transmission bolts to around that hole is square with the flywheel/crank flange.
In other words, not only must the transmission be properly centered when bolted up to the bell housing, it must also not be cocked at an angle resulting in the crankshaft centerline and the transmission centerline not being perfectly lined up straight.
Yes, using a magnetic base on an oil pan will allow you to verify that the flywheel has no runout when turned.
