The flywheel key only positions it for proper timing.---The flywheel is driven by the locking tapers of the flywheel and crankshaft.----That is when there is a proper fit of the tapers and torque of the nut.------Many motors from 9.9 to 300 hp use the same key.
Of extreme importance is that the shaft and flywheel tapers be clean and dry, and you must use a torque wrench to tighten the nut to spec. Sorry, I don't know what that spec is.
It's good you have the manual as it will tell you the proper alignment of the key.
The flat face of the key should be parallel with the centre line of the crankshaft.
The flat face of the key should NOT be parallel with the taper as your's is in the picture.