AAU has an internal left hand thread that is supposed to self extract AAU. Try loosening until the bolt stops, then carefully try to make 1/4 turn more ..... This should engage the LH thread and put pressure on the mag spindle. Then give the bolt a rap with a hammer, and try another 1/4 turn .... repeat as necessary. The AAU will either pop off or the LH thread will strip as it often does. If the thread strips, you will need a gear puller.
If the AAU is stuck on the taper, it is doubtful it has slipped. That makes me wonder how your bike ever ran well in this condition. That aside, let's move on.
The AAU is set with the rubber wedge holding the mechanism in full advance. If you set to 32 BTDC, then with the wedge removed, the engine will be at 8 deg BTDC for starting (that is with a 12 deg AAU ..... 32 minus 2x 12 = 8). The factor 2 x 12 converts magneto degrees to crankshaft degrees. We normally do not worry about the timing point with the AAU in full retard position. Follow my tutorial and set to 32. BTDC. If you have high compression pistons, you may want to set to 30, or 28.
Yes, you do want the audible sound to stop at 32 BTDC (or whatever your target setpoint is) when rotating the engine forward. The sound stops when the points open, that is when the mag fires.
In lieu of Bodger's suggestion to make a tool, you can find TDC by following my tutorial. My method is within 1/2 degree and that is good enough.
Report back on your progress.
Slick