You use the checking tool in place of the pushrod. Make sure you're on the lowest part of the cam for that valve. Screw the pushrod out, to take up the slack, without pushing the cup in the lifter down. On the Crane rocker, which I have, leave one thread showing during your measuring.
Do several valves to get an average measurement. Also you need to measure your lifter cup and rocker ball for ordering.
When you receive your new pushrods, take out the slack, then turn the adjuster 1/2 of a turn. That will compress the lifter cup/piston .020. That's your adjustment.
Just a question, is that the adjustment that you are useing, 1/2 turn after taking out the slack, without pushing the lifter piston down?