Not sure whether we are talking about the same thing
I'm still a bit confused because you are talking about "waiting till the lights go out". Well - unless the C-1 is already fine tuned the lights will not go out by themselves. You need to calibrate the three taxes to extinguish the lights. Well, give it another try:
1.) level the A/C by means of the trims and power
2.) Turn the Master Switch (Bar) ON (no need to wait, spooling up of the gyros is not modeled)
3.) Turn the Servo-P.D.I. Switch ON
4.) Turn the Tell-tale lights ON
By now you should have a few tell-tale lights on as the A/C is not aligned with the PDI (would be a coincidence...)
5.) Center the P.D.I. (gray script on the white bottom of the C-1) by clicking on "HOLD PDI"
Now the P.D.I. becomes centered and maybe most of the tell-tale lights go out. You will see the PDI to the right of the Flux Gate being centered.
6.) Fine-tune the aileron axis to put the tell-tale light out (if still on), engage the aileron servo clutch
7.) do the same for rudder and elevator
By now all tell-tale lights should be OFF and ALL SIX switches must be ON
The P.D.I. script in the white bottom of the C-1 reads "HOLD PDI (ON)" (blue letters), and below that "CENTER" (also blue letters)
8.) Use the LEFT and RIGHT clickspots adjacent to the "CENTER" to engage a standard left or right turn (18° bank) to fine-tune a coordinated turn. Once you have it fine-tuned you don't need the tuning knobs anymore.
9.) Return the P.D.I. to "CENTER" and use the Turn Knob for manual turns. You can actually switch the P.D.I. off at this stage. Just be aware that the turn knob has an extended "Null Zone" - The reason for that being described in the manual.
To use a selected heading first syncronize the C-1 heading with the heading needle of the Flux Gate. You can scroll over the heading figure below the sript "HOLD HEADING" till it matches your actual heading. Then click on the script "HOLD HEADING" and it will switch to "HOLD HEADING (ON)" (blue letters). Now the selected heading will be followed.
If your C-1 does not work this way then something is definitely wrong with your installation.