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Don't sweat the half tooth, that's likely a matter of you not precisely lining up the timing marks or wrapping the belt the wrong way during installing so the belt is too loose on the right. You need to properly re-check the pulley alignments their timing marks to know which way you're out by half a tooth.
The belt starting to walk off may well be a worn tensioner idler puller. They should be periodically replaced, like every second timing belt. A new idler pulley will turn "smoothly" with a wee bit of resistance, while a used pulley will spin, but not freewheel, and a badly worn pulley may freewheel. There should be zero slop or chatter when turned or spun by hand. After replacing the belt, rotating the crank twice then re-tightening the tensioner, you should start and briefly run the engine to make sure the belt doesn't want to walk off.
More important for your no-start is the distributor alignment. It would seem you failed to align the intermediate shaft sprocket which drives the oil pump and distributor shaft. It has similar marks to the camshaft sprocket. In 700/900s with the rear distributor, alignment of the intermediate shaft sprocket is unimportant (although the marks are still there), but in 240s with the side mount distributor you need to align that sprocket. If the distributor is stall out after that then you have a distributor mounting problem that needs to be attended to.
For crankshaft alignment, although you can temporarily replace the timing cover and align the double scribe mark across the pulley to the timing cover zero degree mark, the proper way is using the notches in the guide plates and aligning them to the ridge behind them. To do that properly you should sight perpendicular to the plates using a mirror. Refer to the following writeup:
https://www.volvoclub.org.uk/faq/B230FTimingBeltAlignment.htm
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Dave -still with 940's, prev 740/240/140/120 You'd think I'd have learned by now
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