Yes, the rod is free to rotate as the engine runs. As for orientation, the same end should always be against the camshaft, to save wear on the cam lobe. As the engine turns, the cam pushes the rod out once every revolution, and the spring in the vacuum pump pushes it back in. It's much easier to install the pump if you rotate the engine as you push in on the rod, until it is in as far as it goes.
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