How much can cam Sprockets not aligned? Freelander 1998 K series 1.8s?

My wife bought a Freelancer K series 1.8, 18 months ago, against my wishes and judgment. Have to say it has run very good until now, though it did use some oil and water. Two week ago the PAS and Alternator belts broke. My wife stopped then and then.

It was towed to the garage where they noted it didn’t have any compression when they tried to start it. It has not started since. We had it brought back to our home. Decided I would use the vehicle as project to repair in my spare time.

After looking at this and other forums, I decided today to check the Timing Belt which was replaced at 222,000km only 12 months ago.

It is 35 years ago since I personally looked closely at a motor, so have limited knowledge of modern motors.

After removing the Timing Belt cover I found the Cam Sprockets are out of alignment by about 1 sprocket, maybe 2. Will this small difference of alignments of the sprockets be enough to not allow the motor to fire? Also I found that when manually turning the crank to align the sprockets I could only turn so far before I seem to hit a solid wall, or maybe this is the valves hitting the pistons?

Is this amount of out of alignment enough to cause damage, or not help with starting?
Any ideas would be appreciated, and yes I would love to dump it, but to keep the peace I just nod my head to the wife, hence the spare time project.