Everyone has a preference for doing this. Unless the cam has some HUGE duration then this is the way I do it.
First bring #1 cylinder to TDC. At this point you can adjust both valves on #1. Back the rocker nut off until the pushrod twirls between your fingers easily. Then begin to slowly tighten the nut while spinning the pushrod at the same time. As soon as you feel resistance of the pushrod to spinning then you are at zero lash. You kinda develop a feeling for this and it is OK to try this several times to get it right. Once you are confidant that you are at zero lash then I tighten the nut about 3/8 of a turn more. At that point I tighten the hex locker tight and then give the whole assembly a final 1/8 turn to insure it is locked. This way I end up with about 1/2 turn preload. Next, using the damper bolt, turn your crank 90 degrees. At this point you can adjust both valves on the cylinder next in the firing order. Then turn the crank another 90 degrees and adjust the next cylinder and so forth and so forth. When you do the final cylinder turn the crank the final 90 deg and if you did it right you will end up on TDC #1 again.
If you use Randy's method, make sure you're on the compression stroke. If you're on the exhaust stroke, both lifters will be up a little, throwing the adjustment off.
I like to set the intake valve when the exhaust just starts to move on that cylinder and the exhaust valve just after the intake closes. Easier for me to go right down a bank on one side and then jump over to the other side.
Just my 2¢
Yep as macguyver stated it has to be TDC- beginning of the compression stroke. I watch for the intake valve on #1 to open and then close and then the next time the timing mark comes up you should be at the correct TDC. Out of habit I also stick my finger in the #1 spark plug hole and feel for the out-rush of air to double-confirm I'm at the right spot. Also make sure you are rotating the engine the correct direction if you use this method. As you face the front of the engine you need to rotate the crank clockwise as you go thru the fireing order.
It's best NOT to pump up the lifters prior to adjustment. The old timers always did but I think the older lifters tended to bleed down faster. Most lifter manufacturers suggest to set without pump-up. There is a spring inside the lifter and as the pushrod draws to the lifter you will be able to feel the resistance. If you pump them up prior to intitial adjustment the valve will tend to hang open and may take some time to bleed down to the proper set. Don't worry- it only takes a few seconds for the lifter to pump up on start-up. It's best to prime your oiling system with a drill prior to start-up. This will pump the lifters up too and you'll experience less valve-train rattle on fire-up.
In re-reading your statement, I want to clarify something. Zero lash is when the pushrod JUST BEGINS to push the pushrod seat on the lifter down. The spring inside the lifter holds that seat out and then eventually oil pumped in "solids" the lifter so-to-speak. Your zero lash is JUST when the spring in the lifter starts to compress. This is where you give it the 1/2 turn preload.