What is the correct setting for this? Where is the correct distance measured on the belt?

 

There is a AMS video out there somewhere for the correct settings. Also extreme psi sells the tensioner tool

 

There are two marks on the main body of the tensioner and one on the spring loaded moveable part. The third mark should lie between the other two with the belt installed. The tension is measured between the power steering pump pulley and the water pump pulley with a belt tension gauge. The reading should be between 245 and 412 N ... whatever N is. This all from the service manual.

In real life I've never looked for the marks or checked tension. If the belt doesn't squeal I figure I am good to go. If it does squeal - buy a new tensioner.