That whole setup with the crank arm, bolt cap, and bolt is meant to be self-extracting. It is completely normal to use the 8mm allen wrench and have the bolt go loose quickly, then snug up as you continue winding counter-clockwise. That snugging up is the self-extraction process starting as the bolt presses against the cap.
I would reinstall everything, getting the bolt to the start of "snug" tight, install the cap with the pin spanners (tighten that snugly), and then use the 8mm allen wrench (I have both a wrench and a 3/8" drive key that attaches to my socket wrench) and slowly unscrew the crank arm.
When installing, take everything apart, grease the splines, line up the crank arm with the cartridge BB splines, and push the crank arm in/on. They should slot on about 3mm initially. Thread on the bolt and tighten the arm to the BB spindle. Install the cap with pin spanners. I have found that with the carnk arm, bolt, and cap all together, that it's impossible to line up the splines because you have to actually start threading the bolt onto the spindle and get the crank arm close enough to the splines to start the guess fitting. So I just take everything off to avoid the guessing and mangling of splines.
Sincerely,
A man with many Octalink cranksets.
PS: Sweet find, and great restoration. Another Cannondale fan having just rescued one myself, but this time from menacing dirt, dust, and long-lasting neglect. Now you have gradient decals!