The way I read the instructions is you measure the spring before the spring is stretched and then pull the spring link forward until the spring is 1 1/2" longer than it had been. The idler, in my opinion, is in the right position which is the slack side of the chain.
With spring tension on the chain, try and lift the chain off the top of the sprocket. If you can lift the chain off the top of the sprocket, then the chain is probably worn out.
If possible run a string or straight edge down over the sprockets and idler to check alignment of the sprockets and idler.