[AnthonyG]

A safer test to see if you are binding at the pilot without starting the engine to check for the amount of tension is slight or severe is to raise one side of the rear as it sounds like you've done already and put the car in gear and try to turn the wheel / tire which is raised. Have someone watch the engine to see if it turns as you turn the rear wheel, the compression should prevent this from happening if the binding is only slight. If slight could be that the pilot is just a little tight or got a little banged up while putting the tranny in. If the engine turns over against the compression or you can't turn the wheel / tire then the problem is as has been suggested and your input shaft is dead against the flywheel which will need to be removed and machined shorter. If you are able to turn the wheel / tire you can continue the radial action for several minutes and see if that frees things up. If so try to start the engine in neutral and see if you can get it in and through the gears.

If you are binding against the FW & input shaft this process may damage the end of the shaft slightly by galling but if the shaft was too long this will need to be machined off anyway and any galling which might occur on the FW will be at the bottom of the relief hole. That hole is there for clearance for the end of the shaft so the shaft won't be touching after you machine the end to the correct length so it really doesn't hurt anything.

I like the Idea Tom offers as a test only also but would not want to leave the washers which space it out as a permanent fix as the engine to adapter to bell housing is designed for max strength with all the perimeter faces mating with tension from the torquing of all the hardware. The strength with faces touching in the correct tension is significantly more than if only the bolts are securing with the washes spacing the faces from touching.