As I read and look at this forum I am seriously impressed by the amount of knowledge and hands on experience certain people have with motorcycles in general and with these particular machines.  I'm just an average 'Joe' who sometimes fixes his own machine and 'thinks' that he may be able to do it with respectable results!

Am I missing something.  My '78 DT125 that I picked up and have been riding / checking over as I go along appears to be running OK.  I recently took off the head (Off with his head the Queen said to Alice!) as I thought I heard some noises (beginning to think it could have been chain slap?) to have a little look.  I set the timing by using a battery and light connected to one of the wires coming from the points circuit and I doubled this with a homemade piston stop.
All the marks lined up so I could find TDC.  As I had the cylinder head off I could eyeball the TDC and also the 1.8mm before TDC (interesting to see how it actually looks).  The points look clean and not overly worn, so I left them alone.  As the bike was / is running (fairly well as far as I know) I didnt go the whole hog and use a dial indicator (digital ones are fairly reasonably priced now, but I don't have one at the moment).  
However and sorry to be a long winded old fart, the manual states that there should be a 'stamp' on the stator flywheel and on the case, but blow me if I can see anything.  Here is a pic, if this is the mark (tiny scratch on the stator, which is horizontal not vertical, and just a casting line next to a screw on the case) then this has to be the most pathetic timing mark I have ever seen on a motorcycle (not that I have seen that many)
so just wondering am I missing something here !

Looks like the timing is fixed at the stator and fixed at the rotor, so the only adjustment you have is at the points.  The 175 stator is adjustable and does have the timing mark where you took the pic.

Remembering back to the dark days of yore when the aircooled DTs, TYs and RTs were considered " quite modern"  I cowered under the gaze of my supervisor, fearing getting pulled around the workshop by my ear,  I seem to remember a points gap of either 14 thou or 16 thou was golden across the board.  No further timing check required.

Yes, CDI had the timing marks on the stator/case on some years/models

Points almost always have a "timing tab" under one of the stator coil screws with a corresponding mark inside the window of the flywheel.

I was curious at how well your homemade timing light worked...  battery powered light generally will only dim very slightly when points open.  Depending on bulb, etc, this dimming might be very hard to see. 

Cheers, that seems to be the case. As the stator has no adjusting plate there may be a mark somewhere but I haven't happened upon it yet, so as Tinkicker says it's timing at the points. MarkT as for the light it went out completely with each rotation so either that set up was a bit of luck or something. That said there is a bit of room to end up with different settings. I was fortunate that the bike seemed to be good on reception and I don't think I messed things up too much.
If I'm trouble free, I'll leave it like this but next time round will spend more time with a torch looking through the stator to see what else I can find (and will also probably get a dial guage to finish the job off, as that seems to be the only way to get it done)
Thanks so much for all the input I'm learning things and remembering some things from the past too

Unless you disconnect the points from the condensor/stator source coil the light would not go out as points opened, it would just (at best) dim in my experience... That is one of the most common things that people struggle with when setting timing because they expect the light or continuity tester to go on and off and it simply can't. 

Here are representative pics of what the timing mark and timing tab looks like on points models...  timing tab under stator coil screw is bent out of shape in the photo, originally it would stick straight up and line up with hash mark stamped near flywheel window when points should just open. 

Somehow left out that if you somehow built a simple light that does not just dim slightly when points open, it would be helpful to many people.

Mark thanks for the pic, like I said next time I take the side cover off I will have to LOOK everywhere and try to source the marks that are inside the stator flywheel as apart from the 2 very clear marks on the stator I couldnt see anything else.
As for my setup like I said the light went out each revolution (that's why there were 2 pictures). It was a 1.5v battery powering a 2.5v bulb (I think). I'll have a check in my parts box sometime. Seems that the dial guage is really the only way to go. I'll get there I hope.