Regarding the sensor in the distributor, yes you're totally right, there's mechanical slack and so on and that affects the ignition timing. I see it all the time on VL Commodores with the RB30 engine - they're getting old by now and the gears are all worn, and you have about 2 degrees of movement at the dizzy (if you pull off the rotor cap, you can feel about 2 degrees of backlash by moving the rotor), which means about 4 degrees of spark scatter on the crank (2 cam degrees = 4 crank degrees).
But I wasn't suggesting we use the distributor to tell the ECU where TDC is - I was thinking we use the missing tooth on the crank for the ECU to know where TDC is, and just use a single tooth in the distributor or on the camshaft to tell the ECU which half of the cycle we're on (eg is cylinder 1 doing its compression stroke or its exhaust stroke).
From what I can tell the firing order for your engine is 1, 8, 4, 3, 6, 5, 7, 2.
So the way you've paired them in 1&8, 4&3 etc is how we recommend doing it, and firing the injectors every 720 degrees. But to do this we really need a sensor on the cam as well.
The ignition outputs - are you using a single coil / dizzy or coils packs like LS1 coils?
If you're doing the LS1 coils or similar, then they need to be:
Ignition 1 output -> cylinders 1 & 6
Ignition 2 output -> cylinders 5 & 8
Ignition 3 output -> cylinders 4 & 7
Ignition 4 output -> cylinders 2 & 3
Confirming injection outputs:
Injector 1 output -> cylinders 1 & 8
Injector 2 output -> cylinders 4 & 3
Injector 3 output -> cylinders 5 & 6
Injector 4 output -> cylinders 2 & 7
If you can set up the cam sensor so it triggers once on cylinder 1 exhaust stroke, somewhere between 90 and 0 degrees BTDC, then you can set it up with the settings I said before and then you'll have the injectors sequentialised with the intake strokes, which will be better for throttle response.
Injection mode = "Half speed sequential", injector current = 1.9A
Ignition mode = "Sequential 4", falling edge (assuming you're running LS1 coils)
Dwell time for LS1 coils is about 3500 Ás.