Hi Russ,
To be honest with the manual, I don't know. I built my X-5 about 3 years ago and I am still using the same car.... but like trigger from only fools and horses, this old broom has had 15 new heads and 10 new handles.
... so my manual has seen updates since, and i can't find it to check anyway...
It is whatever is right for your car, if the belt runs better with the gears flipped, then go for it.
the Losi belts are pretty reliable in their quality, they're pretty good.
if you do spot fraying of the edge of the belt, then it can be fixed by cutting it with scissors (may take a 2nd person to pull it tight enough to cut) then a lighter to seal up the edge again without melting the belt - my current belt has had this done once atleast, and I can't remember how long ago I put it in.
If the sides of any gears spin on the gear or seem loose, some can, then don't be affraid of applying a tiny bit of glue - but don't get it in the gears.
Im trying to cover every base here, cos I can't workout how you have both had meltdown. I know Stu's wasn't set overly tight, his car ran very well today at Batley....