The Bob Dylan song made no sense at all, they obviously just wanted to put that song in the show, but it is pretty contrived. The fact that the ancient gods came from stories past down by our distant Colonial ancestors worked well enough for me, and actually made more sense than anything else would have. But why would Bob Dylan have written a song in the 1960's identical to one written by some one else millions of years before?

Also, don't mix up your mythologies, Johnny. The "prophecies" and the gods all turned out to be total bunk. In the end it was the Cylon's one true God that was calling all the shots and pulling all the strings. So all of Roslin's stuff with the Priestess, the scriptures, and the gods is meaningless superstition in the over all story, none of that contributed to them finding earth.

According to Ronald Moore in one of his podcasts, the original intention was that Sam wrote All Along the Watchtower and played it for Tori. Not clear on all the other details of how it lead them to the old Viper (I guess the official explanation is "God did it"), but that is why it lead them to Earth I instead of Earth II.

If you think about it, it wouldn't make any sense for it to lead them to Earth II, because at this point it has nothing to do with Earth II, as Bob Dylan won't be born for a very long time after Galactica's chronology. It was a song from their past lives on Earth I.