Yes, the FSM refers to the connector I'm referring to as the "test connector" in chapter 4. If you search the club site for "initial set connector" you'll find lots of hits but it is referred to as "initial set coupler" as you can see in
this thread.
And yes, you ground the ISC whenever you are adjusting your idle or setting your timing. Otherwise the ECU will fight with you.
Good to hear about the AFM. Bummer about the short.