If I am reading this correctly, you are fiddling with the Timing Chain adjustment, not the timing.
Timing is adjusted by removing the points cover (on the left hand side of the head, labelled "125") and loosening the two phillips screws that hold the timing plate. Timing is changed by rotating the points plate.
To do the job spot on, you need a timing light. There is a cover on the left crankcase, which exposes the flywheel when removed. The flywheel will have a couple of marks on it for timing, T for top dead center and F for the advanced point before TDC when the sparkplug should fire. On the XL125, the points should just start to open, or the timing light flash as the spot marked "F" passes a mark on the bottom of the opening. This assumes the bike will hold an idle while you adjust the plate appropriately.
You can guesstimate the timing by watching the points cam while manually turning the crank (open the bigger slotted cover to expose a bolt, 14MM on the TL, that you can use to turn the crank). The points should just start to open when the "F" shows up on the flywheel.
Of course a picture is worth a thousand words, but I don't own an XL, so I could only give you pictures of a TL, which is bit different beast.