I installed my new cam today (old one worn). I followed the service manual to the tee. I lined up at TDC and had the camshaft register marks on the end parallel to the cylinder head. However, after I installed the tensioner (the external part with the spring loader tensioner and two screws that hold it in place) the cam shaft register marks are no longer parallel to the cylinder when at TDC.

I've attached a picture of the "after" position.

Should I go back and rotate the cam sprocket "one notch" to get it back in line or is this expected to happen after installing the tensioner?

If your cam was worn out what kind of shape is the cam chain? I'm thinking that if it is stretched it could be causing this misalignment.

When I put my motor back together mine did the same thing when I released the tensioner. It would rotate the cam just slightly. I played with adjusting over a tooth, and no matter what I did I could not get it perfectly parallel when the tensioner was engaged. It would be ever so slightly angled in one direction, move it over a tooth, then it was ever so slightly angled the other direction. I think that is just the way they are. I haven't had any problems with my motor like this.

So if I rotated it a tooth, it would be off on the other side? That's what I was afraid of.

I'll take the tensioner out and see what it does.

It is always worth a try. It is just what mine did. You can just try to adjust and take into account that your tensioner will rotate it slightly to the one side. You can adjust to the tooth that will account for the pull to the one side and give you the "most" parallel. I think that is what I did.