How tight should the side bearings be

Your pinion is too close. I would decrease the shim thickness 0.005" and re-check the pattern.

Get the spanner nuts as tight as possible with a 12" wrench when the cap bolts are finger tight. After adjusting back-lash to 0.008", torque the cap bolts to 90 ft lbs.

[ame]http://www.ringpinion.com/Content/Book/Reading-and-Adjusting-Ring-and-Pinion-Tooth-Patterns.pdf[/ame]

Note, the shape of the pattern is more important than where it lands on the gear tooth. You want a wide, wispy pattern that does not curve inward toward the peak or valley of the tooth. It must be centered between the peak and valley, but not necessarily between the inside and outside diameter of the ring gear.