I always used lube for 2 reasons: Qne day I may want to remove it and 2, If you whack something hard, you want the flywheel to spin on the shaft, shearing the woodruff key, not shearing the crankshaft or a connecting rod. But you still need to torque it tight. Don't have the spec. If I were doing mine, I'd run it down with the air impact tool and watch the socket. When it quits turning while impacting, give it 2 or 3 more whacks then get off......½" impact tool turned all the way up. On the woodruff, ensure it's perfect, no deformation and have it and the flywheel lined up best you can. It is part of the ignition timing since the magnet that triggers the ignition is on the outside of the flywheel. A couple of degrees at the crankshaft translate to enough distance at the circumference of the flywheel to keep you from starting the engine.
Others may put it on dry, and some manuals may say dry. Well if it's in the manual, it's from the factory and they are talking about new engines, not used ones. On outboard motors this is a real thorn to me. You can't put a dry head gasket on a 20 year old aluminum outboard motor and expect it to work.....too much corrosion of the interface surfaces. On the flywheel, I told you above why I do what I do and after 50+ years of fixin my own, I'm yet to loose one.
