Color me embarrassed
went out this morning after a good nights sleep and took a GOOD look at everything again, including my old engine and after giving it a close look I decided to take a pair of smooth jawed channel locks and see if the end of the crank would twist, and off it came , right into my hand, the elusive " spacer " with all the correct dimensions. Funny how three experienced mechanics couldn't figure that out.
Once that dilemma was solved all I had to do then was figure out why the torque converter wouldn't fully seat. After crawling into the engine compartment with a flashlight I finally figured that out too. 2 large slots in the tc fit into two large tangs in the trans. The TC will go on and feel seated, but if you don't line up all 3 sets of teeth, small splined shaft, then larger splined shaft then the two big teeth, it's not in all the way. Took a few tries but finally got that too, and that solved all the fitment issues. Now engine is in, mated to trans, bolted down and all wiring is connected. Heater hoses done, and next is to begin installing the accessories, starter, alt, ps pump, ac compressor and such and lastly the turbo system.
Gettin there ! Thanks everyone for your input on this and sorry for wasting your time. Lets hope it runs as good as it looks.