Yes, that's it! The crank sprocket - it's #1 on the diagram you posted. #7 on the diagram points to the TDC notch in crank sprocket lined up with the TDC mark cast in the oil pump housing. #8 shows the dotted lines on the belt lining up with the mark punched in the rim of the sprocket.

If you check the Service Bulletin that Mark posted, you'll see a good picture at Step 26, which says, "Align the dotted-white line of the timing belt with the white timing mark of the crank sprocket (180 degrees from TDC timing notch)".

You did the opposite, however. You lined the dotted-white line up with the timing notch, not the white mark - so your cams were positioned like they were supposed to be, but #2 cylinder was at Bottom Dead Center instead of TDC i.e., 180 degrees off.

As far as why it still works.... I'm not smart enough to know the details of why it works but the bottom line answer is that if you install the belt according to Isuzu's instructions, and then you rotate the engine a bunch of times, all of the pulleys and marks eventually line up as pictured in your how-to. Everybody knows this because your VX runs. My right bicep knows it because curiosity got the best of me. I installed the belt according to Isuzu's instructions but when it came time to spin the engine by hand to make sure there were no crunchy noises I went well beyond the two turns of the full Otto cycle in order to see how many turns it took before everything would line up the way you did it. The answer is LOTS. I can't remember exactly - wish I'd written it down - but I do remember my arm felt like it was about to fall off - and I was using a 2 foot long ratchet and all of the spark plugs were out...

The relationship between cams and crank and a particular spot on the belt is set by the gear and pulley ratios and the number of teeth between the pulleys. It's nothing but math. There's a definite number of crank turns before a particular combination of marks comes around again. A high school kid with a B average in algebra could probably come up with a formula to calculate that interval - but I cant! Hey maybe one of our non-U.S. members can figure it out for us since the rest of the world kicks our azz when it comes to math skills.

Even if we knew how it happens that you can start out with #2 at BDC instead of with the piston at TDC where you would normally expect to see it when the cams are lined up for compression stroke, I'm not sure it would tell us whether it works this way by design or not. Wouldn't it be nice if we could lure an Isuzu engineer in here?!