Walt,
The labeling is not 1-1, 1-2, 1-3 it is I-1, I-2, I-3. "I" is the abbreviation for current or load. The generator has 3 live outputs on the plastic box on the side, L1, L2, L3, and a neutral output, L0 All of the knobs on the front can be moved while the unit is running to check the parameters. Any of the switch positions containing a "3" can be ignored for single phase operation.
A word of caution about the manual. It is incorrect in the description of the connections and grounding. Check to see if your unit has a ground wire run from the L0 lug on the inside of the control box to the bottom of the frame at the ground locations. All of the 20 or so I have seen have this wire in place. If so then your generator has L0 grounded and is set up for 120/240 split operation. I can take a picture and post it showing the location of the wire if you like. Open the control box and verify that the inside switch is set for "240 single phase".
Connect your output to L1 hot, L2 hot and L0 is neutral on the plastic hinged cover accessed through the flipdown side cover. So when running you may move your voltage switch V1-2 to confirm 240 volts on the meter and V0-1 to see Hot #L1 to neutral or 120 volts and V0-2 to likewise check for 120 volts between L2 and neutral. Likewise, you may move the load meter switch I-1 for the load in the L1 leg and I-2 for the load in the L2 leg. When running in the 240 mode and using the L1-L0 and the L2-L0 for the 120 loads it is desireable to compare the I-1 and I-2 and re-arrange the 120 loads to balance the two loads as evenly as possible. There are several reasons for doing this 1) This generator only senses voltage at the I-1 coil to make voltage regulation. If the I-1 and I-2 are very different then so might their voltages because the voltage regulator is only regulating based on the I-1 condition. There are other more complicated issues as well. 2) If the I-1 and I-2 are balanced then the heat load on the windings is better shared and the internal temperature differences in the windings is small and all of that copper in the windings behaves the same thermally which is less stressful on the windings. And you may also adjust the voltage up or down as it is running and observe the change on the meter.
To answer your question as to switch settings for a 240 load only then use V1-2 for the voltage and I-1 or I-2 for the load which is the same. Look at it this way, with only a 240 load what goes out in one wire (I-1) comes back in the other wire (I-2) so the reading on the gage will be the same for I-1 and I-2 when only 240 loads are present. If you mix in some 120 or plug something into the front outlet while also using 240 then you will see a difference between I-1 and I-2 settings. The outlets are on the I-1 leg.
When you fire it up don't let it idle but rather use the throttle and run it up to around 61 Hz on the frequency meter. when load is applied the engine wil slow slightly to around the desired 60 Hz. When I load test for an hour or more I notice that the voltage frequently moves up a little when it gets hot so i have to readjust a little. Likewise, the frequency may move up a little so i adjust back to 60 by using the throttle. Hope these tips help you. these are great little gen sets, very well made, I think you will be happy to have one around.