I just went though this myself...
It goes flat side out. I compared the flange width on the inside of the stock sprocket to the one on the JT and they matched. I've attached a photo of the two sprockets sandwiched flange to flange.
FWIW, the last JT on my bike was mounted backwards and the bike seems okay. I haven't looked closely at the old chain yet, but I'll bet that there's some wear caused by the misalignment.
Ride on,
J~
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Take care of new riders, for we were them, and they will be us. Y. Hong 2004
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