Manual cam chain tensioner adjust.

The bike in question is a 1977 KZ650B1 model with 22,000 miles. Engine is stock except for pods/jetting.

When adjusting the cam chain tension, do you really need to have the engine set to a specific point using the timing marks? Why would having the motor set at a certain point make a difference in how the tensioner takes up the slack (if any) in the cam chain? Just curious.

At TDC, cam chain is slackest on rear side. Which allows the internal "automatic" adjuster spring to do its best work.

Actually TDC is not where specified to set the engine although I'm sure it wouldn't make a big difference. The way to do it according to Kawasaki is to slowly turn the engine over with your 17mm socket looking at the timing marks. After you pass cyl #2-3 marks continue turning the engine until you see the flat area of the advancer. When the flat point starts leave that lined up with the timing pointer, and this is where you leave the engine. Loosen your adjuster, retighten and you're done

How can you tell if its automatic or manual? (Without looking in the manual..)

Some guys here (not me) could tell you how to tell by visual inspection. If you have original owners manual it will tell you how to adjust or "not" (auto)

Look at the outer part of the tensioner for the 10mm head hex bolt used for the adjustment. If it's a long bolt with several threads exposed and a jamnut securing it to the body of the tensioner, it's a manual type. In this case you position the engine where specified, loosen the jamnut, then the bolt. Spring pressure adjusts the chain tension. Tighten the bolt, then the jamnut and the job is done.
If you have a 10mm head bolt on the end of the tensioner tightened flush with the body, this is the automatic type tensioner and no adjustment is needed.

To clarify what Ron described... the bolt is M6 (6mm) not M10 but you do use a metric 10mm wrench to loosen.