Bellhousing alignment help needed
That will work. If the hole is "dead" round then you need to make sure that the back surface of the bell is parallel to the back of the block. If the back surface of the bell is not parallel to the block then the bell might have been machined improperly which will make the hole in the bell indicate like an oval. You already have the set-up, just move your indicator to the back surface of the bell to check for parallelism. If the "back" bell surface is parallel to the back of the block and the hole is round go to step 3.
PS - Make sure that you don't have any end play in the crank when you check the back surface of the bell, if the crank moves axially it will give you a false indication.
