When the whole rear end is out, those are the hardest to address, where to go first?
I would string another bike, just to get a feel for the numbers you might end up with, yes, not accurate, but it might give some direction.
I would also take my handy Campagnolo straight edge and look at the alignment from between the front chainrings to where it hits the freewheel cogs. It should land at the center of the freewheel, I think it will be one way or the other out, your guess.
That should give you a direction and possibly magnitude to move one side then the other to get to 120 mm, I am assuming a 5 speeds, 120 mm rear end, decide now if you want that or 126.