You haven't said whether you've done this with a cold or a hot engine ;-)
So, your throttle arm should touch the cam. Loosen the throttle cable, then with the cam held open i.e. pointy bit at the top, wind the throttle arm screw in until it JUST touches the cam with , then turn it in another 1/4 turn. That'll set the base point for tuning the carb.
(You can also do it using a vacuum gauge for more accuracy- connect vacuum gauge to distributor vacuum port, run engine and while holding the cam up screw in until the vacuum gauge just moves, then turn back until it doesn't.).
You'll be able to figure this out by looking at it, but it helps explain what you're doing- when the engine's warm, the throttle is held open only a tiny tiny immesurable amount (due to that 1/4 turn of engagement with the cam). When the engine is cold the cam is dropped, so the throttle is held open a fair bit more, which ups the idle speed to keep it running. The throttle being the lower flap you can't see from the top really, the choke being the top one I'm sure you've guessed.
Now, sorry, but your carb tuning is based on that little screw, so now you've adjusted it you've got to tune the carb again. Always worth making sure your other tuning points are sorted first, to get the most out of your adjustments. Spec is 3%CO +/-1%, I always recommend using a CO gauge since very few of us are time served air cooled VW mechanics at this point, and if you measure the CO you can be sure you've done it right.
So once that's done (or before that's done, it doesn't make much difference but DON'T SKIP IT) you can set your choke up. Really simple. Make sure the car is cold, and off. Blip the throttle, the throttle arm should then be set so that it's on the highest step of the cam (just like the cold weather starting procedure- that just makes sure the choke is closed).
In this position, the cloke should essentially be closed. Might be a wee gap at the side, but you're aiming for closed. Then start the engine and let it warm up. After about ten minutes, the choke should be fully open. If not, rotate the choke element (three screws, rotate the cylinder, the alignment marks are essentially useless most of the time) until it's just fully open. Check it- let the car cool overnight, take a look at the choke flap before breakfast. Done.