When we first did % power, we didn't know as much as we do now. All the tables we had were for 8.5:1 engines, so we played it safe.
Turns out compression ratio doesn't matter. The tables for a 8.5:1 and a 9.0:1 engine are the same. What really matters is the redline RPM.
If you still have SW that says 8.5:1, you should update to software 4.0 or newer. This will just say "Lyc/Cont" and will ask you the redline of your engine.
HP is used for auto detection of ROP vs. LOP operation (something nobody else does). Set this number to 188 in the beginning, but don't be surprised if you need to tweak it to something like 180 or 170 to get your LOP/ROP to match your manual leaning. If you set it lower, it just means your engine is more efficent.
And just as a comment, % HP is way more complex than just MP and RPM. There's a reason all the Lycoming tables have altitude and OAT on them. Technically max HP doesn't matter at all either, since we're displaying % of max HP, not actual HP.