That part in the red circle I don't remember. Is that from something grinding it? Also, you can tell the crankshaft side clearance is off by virtue of the shiny metal on the case where the red arrow is. Of course, it's been a long time since I've been in the bottom of a Gasser so maybe I'm just not remembering those two details.
I agree, check all washers and thrust bearings for proper thickness and placement. Something definitely isn't right.
