727 transmission dilemma.

Thank you for your experienced advice. I wonder though if we had clearance issues with the overrunning clutch or with a planetary thrust washer installed , both possibilities , would the snap ring at the end of the output shaft seat in the groove ? Also the end play of the input shaft after assembly seems normal.

Yes, if you have a thrust washer out of place, or a seating issue with the sprag inner race , the snap ring on the output shaft would not seat into the groove.