NEW INFORMATION WHILE WRITING THIS POST ... I found the paper service records for the bike. I was incorrect, the PO did have two valve checks done, but no adjustments were made, so the right side cams have never been off the bike. But the left side cams have, at GruuvySTOC in March of 2009. The left exhaust valve for cylinder #1 was at .008 so we made an adjustment. I recall the timing chain got hung up after we installed the cams, and we had to rely on the T1 timing mark to get everything put back together. It is possible that we put the cams back in wrong, confusing TDC on the compression stroke for cylinder #1 and cylinder #3.
I just went out and went through the whole procedure again, this time finding T1 and #3 cylinder at TDC on the compression stroke (as indicated by the position of the lobes on #3). The timing marks on the left side sprockets were correct for cylinder #3 (step 3). I then rotated the engine CCW for 90 degrees to T2; and the timing marks on the right side sprockets were correct for cylinder #4 (step 2). Rotated the engine 270 degrees and back to T1, and the timing marks are correct for cylinder #1 (step 1). Rotated the engine 90 degrees to T2; the timing marks on the sprocket are correct for cylinder #2 (step 4).
So, now it appears that it's the left side cams that are installed incorrectly. The only real way to confirm this is if I am able to determine if cylinder #1 is at TDC on the compression stroke without using the cams. Can anybody tell me how to do that?