i'm stumped. the flywheel is on correctly as you verified above, beveled edge towards tranmission. i also pulled the torque conv out about 2" and it did seem to engage back and spin correctly, but as soon as i tighten the bell housing bolts tight, there is no clearance between the flywheel and torque converter and the engine won't rotate (or very very difficult). the crankshaft end play looks ok as far as i can tell, it doesnt seem to be pushed back. i'm thinking about hoisting the engine back up and take the torque conv out all the way and inspect again any comments appreciated.

update, here are a few photos of the torque conv shaft, i assume the ring about 3/4 the way up the shaft towards the conv (after the blotchy rust area) is where the seal makes its mark. that is where the torque conv was when it was installed. it would seem the converter is also installed correctly, then that only leaves the crankshaft position, could it need to travel forward 1/8" ? i didn't set the thrust bearing clearance like the book said ? i'm stumped.