Flywheel starter issue

I am having an issue with a flywheel and starter. This is what I am working with a 1987 302 50oz balanced motor with a 1983 T5 bell housing. I have a 10.5 size flywheel 50oz balanced. The starter is dragging. I have the spacer plate between the motor and transmission. Any one else have this issue? its driving me crazy.. Thanks Todd
 
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