the T4 engine is essentially the same as a T1.
If the engine is in the car - put the car in neutral then go to step 1
if the engine is out (floor / stand), go to step 1
1) If distributor is in (correctly) - pull cap and turn the engine over by hand (by the front pulley) - doesn't matter if it's an upright converted motor. Turn engine over until it looks like this: http://images.thesamba.com/vw/gallery/pix/555213.jpg
there is a little notch in the distributor top ring that indicates TDC of #1.
2) to adjust valves - pull off valve covers
3) turn the engine over either 90 degrees at a time and switch sides, or 180 degrees at a time and stay on the same side of the engine. This sounds a bit confusing, but ever 90 degrees of the distributior, one of the cylinders will be at TDC. It's pretty sstraight forward as the others will have the vavles opened a bit.
4) if it's a hydraulic T4 motor, there is some different opinions on setting the valve lash. most agree it's zero plus 1/4 or 1/2 turn.
http://www.ratwell.com/technical/HydraulicLifters.html
http://www.moonrosedesigns.com/tunacannet/t4/tech/hydcam.htm
5) if it's a solid lifter motor - as most of them seem to be - the proceedure is the same, but the setting is different.
Ther eis a lot of really great info on the web on how to do this. thesamba and shop talk forums have many threads on this already:
http://www.thesamba.com/vw/forum/viewtopic.php?t=341903&highlight=solid+lifter+setting