If your distributor is currently set up for a static timing of about
10º BTDC then the Next Cylinder Mode is the easiest
to set up and get running. You can use the Next Cylinder
mode to get started, and decide later if you want to move to This
Cylinder Mode.
First set up MegaTune to help you time the distributor. Set the center
LED on the MegaSquirt front panel to show the state of the Trigger.
These settings will be under Menu Basic Settings > Codebase
and outputs Function.
To do this set Distributor to MSnS^, LED 19(D16) to IRQ trigger.
This LED is usually set to Warm Up. Click on Send to ECU. Here is a
subset of the settings in the dialog box.

Caution:
For your safety, you must disconnect power from the coil to prevent
a spark.
With the distributor ignition input wired, coil disconnected and ignition
on: