I have a blue point pulse adapter, pretty much the same as the one posted. Works well, just make sure you turn it off when you're done using it. There's no light to indicate when its on, just the knob position. Minor complaint, otherwise its excellent.
It has a piezo-electric sensor that clamps onto the injection line. A wire connects to that, and then it has an alligator clamp to a ground. It has a loop of wire that produces a pulse of current like in a spark plug wire would, and that's where pickup on the timing light will clamp onto.
If you have a regular timing light with no advance feature, you'll need your damper degreed out. If you get one that has the advance feature, then any reference mark will work. Obviously, TDC would make the most sense, but if you're doing timing changes and just need a frame of reference, a random mark would work.
http://buy1.snapon.com/catalog/item.asp?P65=&tool=all&item_ID=647416&group_ID=675532
That's the light that I have.
I've found with the pulse sensor right by the injector, its about 1-2 degrees retarded of what the timing chart says it should be. The sensor near the pump is advanced about 3 degrees relative to the injector. So it jives with the numbers well. And it allowed me to make a timing chart for a pump that I had built with an aftermarket cam that did not come with a chart, and was 'pinned' at 17 degrees, but was actually at 12.
I don't use it often, but I still think it was a good purchase for when I do use it.