The last few I've done, I just center-marked the PTO output shaft, then center-punched the mark. Once you've got this done. you can set the engine on the drill press recoil side down, as this provides a nice, level base to drill against and holds the crank in a vertical position for drilling. You also can work on the floor (if you don't have a press) and hand drill if you feel confident in your ability to drill straight. Anyway, I use a size "F" drill, which is the tap size for 5/16-18.
Follow that with hand-tapping the hole, which is sometimes made easier by placing a rag over the PTO and grabbing it with some vice-grips to keep it from turning while you twist the tap into it.
Alternatively, I suppose you could tap to 5/16-24 using an I-drill, though I haven't had an issue with the coarser 18-pitch thread.