Hello,
For a hinge joint, the free degree of freedom is always the joint x axis. To set the hinge alignment, you should use (b), i.e. the Axes Alignment options under the Joint Axes on Structure A and B. It is probably easier to do this by Direction Entry. In your case, you should set the Rotation About Local Y to 90 degrees, in both Joint Axes on Structure A and Joint Axes on Structure B. The structure positions may look a bit strange when you have only set the axis alignment on one side, but they will go back to normal once you set the alignment on the other side as well.
I hope this helps!
Mike
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