I have a 3W 50?? twin. What is the correct way to mount the prop for proper alignment. There is one RED Dot on hub and one small notch at another location.

If this twin is anything like the other 3w's they have a lonnnnng stroke,I usually set mine at 2:00 or 2:30

Prop mounting should suit your preference. Right handed people like the 2 o'clock position best. With the carby at the back of the engine, prop b;ade wash will not influence carb function, so the position will have no influence on motor running.
The red dot you refer to is the ignition pickup magnet. The other is green to indicate reversed polarity. 3W has a two-magnet system, like most electronic ignitions nowadays.