What's the best method - adjusting the lash with the engine running or with it off?

 

Depends on whether the engine is running or not.

Either way works fine if done correctly.

 

If you are unsure, do it with the engine cold. Then, lash the valves when teh engine is running. From reading the searches on valve lash, it seems it is more percise lashing the valves hot. Once you lash them cold, you will be close! then start the car, back off the nut till you hear the rocker clacking. Then tighten it till it stops clacking. do this slowly. Do each valve till the clacking stops. Turn off the engine. Then, take a sharpe pen, mark the top of the nut and give each nut 1/4 to 1/2 turn. Just make sure they are equal, meaning all nuts must have either 1/2 or 1/4 turn on them. The book says 1 full turn, however, I have never went past 1/4 lash.

 

Valve lash on a hydraulic lifter is presetting the lifter itself more than adjusting the valve/rocker. The proper adjustment no matter how you do it is to preload the lifter .030" from zero lash. .030" is usually 1/2 turn from zero lash.

Zero lash is when the lifter/pushrod have just made contact enough that there's no gap between them. You're right on the edge of having noisy rockers or are turning the nut too tight and preloading the lifter.

Some people like to say zero lash is to tighten down the rocker until the pushrod stops turning between your fingers. Personally I don't like that method since you can still preload the lifter while turning the pushrod. I usually jiggle the pushrod while tightening the rocker until it stops moving.

You can get even more high tech by using a .0015" feeler gauge on the valve stem and tighten the rocker until drag is felt. Then use a dial guage to preload the lifter .030".